http://www.gamespot.com/news/2005/06/06/news_6127039.html

My question is...why don't they just charge it $400 or even $350 as PS3 most likely will?

My guess is they will make some of it back on online gaming suscriptions, plus for every xbox 360 sold a competitors console sits on the shelf. Ps3 isn't likely to hit the retail market until early 2006. So is Microsoft really losing money if they can prevent their competitors from making any. Also the xbox 360 is just another part of the multimedia package MS is trying to create where your whole home multimedia experience, music, movies ,tv , pc etc. are all linked through mediacenter xp and folks there's where the money is....

I guess that makes sense but there isn't any money beind made from Window Media PCs, people have them or they just don't.

Optimized for Online Instant, out-of-the-box access to Xbox Live features with broadband service, including Xbox Live Marketplace for downloadable content, gamer profile for digital identity, and voice chat to talk to friends while playing games, watching movies, or listening to music
Built-in Ethernet port
Wi-Fi ready: 802.11a, 802.11b, and 802.11g
Video camera ready

Digital Media Support Support for DVD-Video, DVD-ROM, DVD-R/RW, DVD+R/RW, CD-DA, CD-ROM, CD-R, CD-RW, WMA CD, MP3 CD, JPEG Photo CD
Ability to stream media from portable music devices, digital cameras and Windows XP-based PCs
Ability to rip music to the Xbox 360 hard drive
Custom playlists in every game
Built-in Media Center Extender for Windows XP Media Center Edition 2005
Interactive, full-screen 3-D visualizers
Trying to appeal to more than just gamers...

Microsoft could lose a thousand dollars a console and still have money to burn. I'm guessing that Gates is hoping for success of Microsoft's entire adventures into console gaming rather than the initial launch of the XBOX 360. Remember, even the first XBOX didn't necessarily rake in the cash for Microsoft.

I do have to agree though that I find it strange that they couldn’t adjust the price somewhat to at least decrease their initial losses.

What they lose on hardware (As with the original Xbox), they gain in game sales. They need to get an Xbox in most people's living room to prevent them buying a Sony console (And costing them much more in lost game sales). If people wait for the price to fall, the competition will already have their consoles out by then.

Also, there's all the downloads and the Xbox Live subscription. And in time, the cost of manufacture falls faster than the retail price, so they eventually start making money on the consoles. Its a smart marketing move that the consumer can benefit from. For once, well done Microsoft.

I think Gamerz has pretty much 'hit the nail on the head'.

Nicely put.

All of this while Sony still profit from both hardware, video games software, and online gaming subscription right from the day they launch PS3, hmm that's werid but whatever work for Microsoft.

Microsoft's main objective is probably to seize as big a share of the market as they can get before PS3 hits the market. Being first out allows the competitors to exceed your specs, like microsoft did with the xbox over PS2 the first time around. Gamerz has a very valid point and I tend to agree also, I work in the manufacturing industry and Microsoft wouldn,t be the first corporation to sell at a loss to gain market share.

Wrong,

MS's main objective: Finish what they started!

What they started: Taking over the world.