But a lot of people play games for quality. And again, like Kite said, that's why there will be the Wii U.
And yeah, I can name at least 20 people off the top of my head that play games without even having Dial Up. And, it's not like Microsoft is losing money on the 360 now, in fact there are still people buying. It may not be the "thousands" that were when it first came out, but people still are. So if they make a newer, better console, and it makes them money, why wouldn't they?
And 20 years from now they can do the same thing again. That's like saying they wouldn't of made an Operating System after Windows 7 because more people were using mobile computing, then PC's. But look, Windows 8 is around the corner for Tablets, Phones and Desktops/Laptops alike. And even if it is just 7 but more "mobile", people will still buy >3>