The analyst talked to for a Wall Street Journal article seems to be disconnected from the gaming community. He states things like:
Added Michael Pachter, an analyst with Wedbush Morgan Securities: “At the end of the day, we don’t play games for social interaction … We play games to escape.” Microsoft’s strategy is “absolutely flawed,” he said.
He does not seem to understand how great Xbox Live really is, and how MMORPG’s have hundreds of thousands, if not millions of subscribers. The best thing for Microsoft is their Live service. Not only will it help bring the profitablilty of the Xbox 360 up, but it will also help connect gamers no matter the game, unlike other more fractured services.