Even though the PS2 did totally defeat the Xbox in unit sales, the 360 did defeat the PS3 quite handily, though yes - both were ultimately handed their asses by the Wii. My point was that the Xbox and the 360 have been WILDLY successful, and the fact that they managed to beat the HIGHLY anticipated, FAR SUPERIOR PS3 (I mean come on, it has a built-in blu-ray player...), says a LOT.
Yes, their main tactic is to throw money at the problems to make them go away, but this is a pretty successful strategy for them, or rather, in this particular example.
I'm no MS fan - I think most of what they make is crap. I have a PS3, two Macs, a Hackintosh, an iPhone, an iPod, and my wife has an iPhone too. I have ONE HD that's partitioned to run windoze as well, just for some games that never came out on the Mac (like Total War), and every time I boot into it, I want to rip my hair out.
...I just wish Apple would make things as functional as they make them pretty.