Is Microsoft fighting a Vietnam War or a Civil War?

Put your thinking caps on and check out this piece by Knowledge@Wharton, which questions whether Microsoft's size is beneficial or detrimental to its future. As Microsoft expands into new markets, they exponentially expand their long list of competitors (Sony, Nintendo, Apple, Google, Yahoo, etc.). And, on top of the that, time and technology may eliminate some business ventures and force Microsoft to transition into other industries — AOL is having a similar problem letting go of dial-up internet, a moribund technology, while seeking other ventures by purchasing smaller companies with incredibly awesome assets.

Microsoft's Xbox Division has cost the company quite a pretty penny but, as they have always said, it's a long-term investment. Microsoft's premium Xbox Live service, and its Marketplace (where Microsoft can sell a game, but does not have to worry about packaging and distribution), are incredibly profitable, but to what extent does it balance out selling an Xbox 360 at a loss? How important will the Xbox division be in Microsoft's future?

Microsoft is trying to incorporate its Xbox success with PC gaming, using Live Anywhere and the eventual release of Windows Vista. There may be a day, in the distant future, where Microsoft cannot rely on Windows or MS Office for its hefty cash flow. What is the more accurate analogy to Microsoft: the US in the Vietnam War, a major power held off by a smaller (yet clever) enemy, or of the North in the US Civil War, who used brute force to take down its ill-funded aggressor?

We could never do this article justice, so we beseech all Joystiq readers to take a look at it.