Yeah, you'd think he would except... then you wouldn't have to buy the consoles, eh? Thats a huge loss right there.
This wouldn't be so, microsoft lose money on every xbox they sell. its been like this from day 1. On release day the xbox cost microsoft £330 to make each one and they were sold at £300 (in the uk).
At present I would imagine that costs have been reduced but the xbox price has been slashed to under £100 now!
So, to make profit, microsoft are concentrating on the software sales (and peripherals of course...)
So for Mr. Gates to create his own Xbox emulator would be a good business idea as long as pirate disks couldn't be created!