The thing about RROD is that Microsoft attached the loss to the previous fiscal year, so unless it costs them over $1 billion in this fiscal year, the loss is already accounted for. I have a feeling the $1 billion is intended to last at least a couple of years, if not the system's entire lifetime (but that probably depends on if hardware revisions like Falcon fix the issue going forward).
Of course, further price cuts on the 360 could still delay profitability. Personally I don't think MS will bother with a price cut, I've been hearing lots of bundling rumours, I think MS will use that instead. Throwing in a couple of games is nearly free, and $400 still puts PS3's "worst" SKU smack-dab in the middle of 360's two best SKUs...it's not that big of a threat.
With a better game lineup and a price that's still significantly lower, I think MS will rely on bundles until sometime next year. Maybe a price cut to coincide with one of PS3's big game launches.







