Because the competition is outselling the 360 it does not need to cut prices that would generate losses just to get extra consoles on the market. 360 has sold around 11.5 million in the Americas alone a good market indeed after 2 and a half years in one region. 360 sales same time last year have increased significantly in comparison to last year in the Americas too.
Profitability is MS's main aim regarding its Game division, revenue will be generated from Xbox Live subscriptions, software sales, accessories, DLC,etc.