Microsoft, whether they knew this would happen or not, has a very powerful card in their deck. It's called "Armies of Fratboys who will follow Halo-whatever-# over mountains and off a cliff if it comes to that".
It was an untapped market, because it introduced a culture of former "non-geeks" to competitive multiplayer gaming, and had the side effect of luring post-grads and pre-grads into the circle. Tons of kids with expendable cash, and a brand name seared into their brains. It is a gravy train like none other. And they can COUNT on people buying the 360 just for that reason. You can preach on about how utterly ridiculous the pricing and the release timing was, but it really doesn't matter. Rest assured that ( in the US anyway ) the XBox360 is WELL taken care of. There was no need to prove a killer app at release, the buyers PRESUME that it will come later.
Things might have gone differently four years ago, but they didn't. And here we are >.<