I just can't comprehend how they thought volumes like that would be possible at $499.
Simple hubris ?? I mean from a few perspectives the "ONE" as a way to fight 3 or 4 battles at once was quite elegant. Just enough processing power to go up against anyone in the console space, a tv solution to fight Apple/Google/company X, a tile system that used an input system analogous to touch for windows 8, kinect 1 sold well and the wii sold well so why not grab the casual gamer, a new digital disk distribution system to woo publishers and lock folks into the Live ecosystem. A console that did all kinds of things at a time "just a console" seemed to be on it's way out as a viable business strategy. All done for $499 without selling at a loss. Not too shabby just not the right lessons learned from experience.
The wii WAS the casuals gaming console and that seemed to sate that consumer ( along with tablets and phones ). The kinect sold well but wasn't drawing developers, While the 360 was enough processing power to get the job done and it was a year ahead ( and consumers suffered ) which the ONE wouldn't be. Live had and has a good reputation but only 1/2 the folks with a 360 got the gold treatment. Price price and price. The fact that they seemed to fall into the same pitfalls that Sony did last gen just screams some form of greek tragedy.