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Doktor85 said:
Microsoft wins this Christmas compared to Sony. No doubt about it. But at what cost? X360 is already $150, how low can they go? Lowering their high-end models won't have a massive impact compared to the price-cuts this year. We are just 3 years in this generation and probably 3 years to go.
It's better to be a winner in the last 3 years (more sales), than the first 3 years (high costs). Still Microsoft has improved much compared to last generation. Their mission is already accomplished.

 

Its worth it to MS to lose money in their games division, merely to gain marketshare.  Their entire presense in the console industry is a measure to protect their interests as the primary computing platform in a household.

These phenominal sales may very well result in some horrific losses posted, if the price cut is below a profitable level... but in the grand scheme of things, they are accomplishing their ultimate goal of defending MS's PC monopoly from potential living room contenders.