Not sure how some people are thinking this way considering the 360 should be alot cheaper after it ahs been out for 3 years.  That is the most obvious answer but what about the software, accesories, and xbox live.  Wouldn't ALL of those increase if more people are buying the hardware and there for off settting any potential lose from the hardware?  Funny thing is software is the reason that sony bring up when talking about making a profit so why wouldn't the same apply to the 360.  What do people think?

thats obviously the stratergy, whether itll pay off is nother matter

nail, meet hammer

Who said they are losing profit from selling hardware? They just launched a 360 with different architecture, cheaper to produce.

Don't let the ps3 fanboys (sorry, didnt' see any wii fanboys complaining, but you guys are...included too if you are) make you think that MS is losing money on the price cut. The quarterly statement should give a better idea what money they're making.

With the recent price cuts MS intends to appeal to gamers that don't have a lot of money. What they don't see is that Pros have been going for $199 on eBay for months and that the PS3 has a bigger sales potential. Even if the cuts succeeded, I don't think that it would allow them to make a lot of money. Why? Well poor people are more likely to buy used or pirated games, they won't buy many accessories and they won't buy Live.

MS are I suspect cutting quicker than cost reductions at the moment, meaning profits (assuming they make some on console) are going to reduce if I'm right.

But lack of traction in Japan, slipping behind PS3 in Others and seeing PS3 make up ground in US was clearly too much for MS to just sit and let happen so they're reaching for the price response.

Ideally this will give enough of a spike (but not too much of a spike) to encourage Sony to consider a price cut just in time for the Holidays.

Who buys pirated games when you could burn them yourself...and Ebay 360 sales are horrible to compare because any smart buyer knows that older 360s could have complications. A majority of people don't like buying certain electronics used and for good reasons. Poor people could also be inclined to buy cheaper games, which is what the 360 does have since it's been out longer.

Not to mention your last statement actually supports the price cut idea. Cheap gamers that can't afford live or accessories are definitely not going to pick a PS3 up in the near future. In fact if they can only buy a 199 arcade and not buy accessories or live they're never getting a PS3 this gen it seems. Wouldn't that be considered a win to MS?

who are these smart buyers you speak of?

 I am one of them.  I bought a 60GB after the price drop.  A freind suggested that I could get a 360 for cheaper off of ebay, but I deciede that the risk of getting an older model that was prone to RROD failures was to great.  I don't know if Microsoft would honor the 3 year warrenty if you where not the original purchaser.

@the prof00 actually the amount of smart buyers aren't many when I think about it, you are correct. When it comes to consoles and games smart buyers in general are people like us that roam the message boards, and constantly watch the gaming scene. We are a minority of gamers.