That's the thing though, I don't see the 360 and PS3 as failures at all. Well, the 360 has utterly failed in Japan, but it's doing robust business in the U.S., and Microsoft is making money off of it. The PS3 is still a player in the Japanese marketplace, and it's gaining momentum in the U.S. as well.
This whole aspect is indicative of how the whole "console wars" thing is so overhyped and imaginary. It's like last generation, where Nintendo was making a ton of money on the Gamecube and sold quite a few of them, but were seen as a "failure" because of stupid console wars statistics. There were even articles questioning whether or not Nintendo would "survive". You've sort of got that now with the PS3. It hasn't sold nearly what it should've, and Sony has given up a lot of ground to Nintendo, but that doesn't make the system a failure. Just a disappointment and a hiccup for the suits and the investors. It will probably do just fine as people start making the Blu-Ray move, gets more marquee titles, and comes down in price more. Microsoft's success is as overinflated by the gaming press as usual, this generation because it's the console the vast majority of them seem biased toward (don't lie), and last generation because they were a new player in the industry that managed to carve out a stake for themselves, which was impressive. The Wii, I'm still told to believe, will be exposed as a "fad" (anytime now, right guys?) and has outdated hardware, which I think is pretty funny, as one of the 360's selling point (HD DVD) is already basically useless, and isn't going to get less useless with time. Oh yeah, and if Game Informer is to be believed, it's like Atari 2600 in that it has too many bad games, and will bring doom and DESTROY THE GAME INDUSTRY AS WE KNOW IT!!! Laaammmee. Not to mention a true testament to the fact that everything always looks better when you're remembering it 30 years later, as I'm pretty sure dog food companies and Quaker Oats aren't making Wii games.
The bottom line is that there really isn't some cutthroat "console war" going on anywhere. But "the industry is constantly growing and is allowing a lot of companies to thrive and sell systems" just isn't as inflammatory and exciting to talk about than who's "failing" and "winning" and who may not "survive" into the next generation.
EDIT:
Okay I've got to do some "bad simile" busting here:
I think that saying Nintendo was going to "cut and run" 5 years ago is as silly as saying Sony or Microsoft will today or in the near future. They're entrenched as entrenched can be. It's like saying Honda is going to drop their car division, or Apple is going to drop their iPod division.
This just doesn't work. Again, Honda is a car company. I'm not an expert on them, so I won't say that categorically the only thing they're involved in is cars. But I'm pretty sure it is, and if it's not, I'm sure they don't make nearly as much money anywhere else than they do with cars. Apple does make other products, and they're a better example of what you're going for, but like you said, the iPod is ridiculously successful. It's a mainstay of pop culture now. It's on a much higher level than either the 360 or PS3. It would be moronic to remove something making money hand-over-fist. But neither the PS3 or 360 IS making that kind of money. You obscure your opponent's point with the strawman that they aren't just going to leave games "today or in the near future". But as you already know, that wasn't the point. The fact is that both companies are high profile, publicly traded companies that have made a lot of money in other things besides games for a long time, and have a bunch of shareholders to appease. The fact is that if the line under "Games Division" is red for too long, the shareholders get impatient and all the justification of the potential of games for growth won't convince them that the division isn't ineffective. I'm not saying they'll leave soon, in fact I think they're both in for awhile at least, but you just can't argue that they're in the same boat or "just as invested" as Nintendo. That simply isn't an argument you can win.