How much does it cost to make the 360?

[amirnetz]

Does it really matter?

What matters is that the 360 business is very profitable these days. The the tune of about $1B/year.

Unlike Sony and Nitendo, Microsoft is able to get another $40/year on Xbox Live services from the majority of 360 owners. With a very nice attach rate Microsoft makes afrom 3rd party games sales royalties (about 3-4 games/year) another $30--$40 per console per year. Big 1st/2nd party games (Halo, Gears, Fable) bring in another $60/year from about 25% of the owners.

Altogether, Microsoft is probably making  about $90/year per console. If it chooses to lose a few bucks up front  on new sales in order to guaranty this kind of revenue stream then that's a valid business decision.