Also, with regard to the gp specific point about the discussion being in regard to a gaming console: they want the product to last as long as possible. Each additional function unit in existence counts toward their installed base and increases the attractiveness for third party developers.
The practice still makes no real long-term sense though. What do you do after `warranty_period` expires and no one wants to buy your products anymore?
Or the flip side, if you want to go that way. Higher reliability allows you to offer a longer warranty, attracting either higher prices or more customers.
This is part of how Japan made themselves mainstream car sellers in the US. They calculated that the cars had to be more reliable, because in the early days without a lot of infrastructure, recalls would be very expensive. So they made the cars reliable. Allowing them to offer longer warranties.
I just bought a two year old Toyota, after driving a Honda that I bought new for 25 years.
For something like a car or a Microwave this is not the case, but this is why the profit margin on a Microwave is closer to 50% than 5%
For example, take a look at the financials [1] for Black & Decker, a manufacturer of tools. For the quarter ending 4/4/2015, they had gross revenue of 2.6 billion. Less cost of goods sold, they have a gross profit of almost 1 billion, or about 61% gross margin. But then observe all of the numerous expenses and taxes they have, which causes their final Net Income (aka net profit) to drop to 162 million, or a net margin of about 9%.
9% can be considered an outstanding rate of return in this industry. If you could come up with a way to build a manufacturing company with such a return, you could have your own IPO.
[1] https://www.google.com/finance?q=NYSE%3ASWK&fstype=ii&ei=-Am...
Companies that make console hardware want you to be happy; they're not going to ship you a hunk of hardware that generates a Warranty Expired Interrupt at one-year-and-one-day because they want you to keep buying games and services. Having to buy a new console is a hassle. Maybe you'll buy the competitor's console instead, who knows?
On the other hand, console margins (and yes, generally they have margins these days and are not sold at a loss) are razor thin. There are knife-fights in meetings over three cent changes to components because at production scale those pennies rapidly turn into millions of dollars. You don't make a console with a reliability of 20 years because it would cost way too much and be obsolete long before the failure curve started to inflect.
So you optimize the product lifetime for user expectation of value, how long you think the technology will remain relevant, what the market will bear, and a bunch of other things (chip sourcing, cost of manufacture, architectural headroom and so on). This involves hard-won experience, spreadsheets, testing, figuring out how vendors are lying to you, plane trips to godforsaken industrial parks, and fist-fights in hallways. It's awesome :-)
Are there companies selling stuff that will break the moment the warranty is over, or earlier? Sure; they are betting that actually getting warranty service is so inconvenient that you won't bother. On the other hand, having watched (from the outside!) the execution of a product-recall-scale warranty, I was impressed with the company's professionalism, and it didn't strike me as a company that didn't care about repeat customers. It sucks on both sides for something like this to happen, but there's very little cyncism involved.
I can provide a different and less cynical interpretation for your example too. Companies that sell stuff that only lasts until the warranty is over are providing a valuable service for customers who don't want to pay as much as they would have to for a higher quality product which would outlast its warranty.