A good move by MS. Market share at the end of the day will have a huge impact on long term profit and the overall viability of the platform.
So i dont think MS will be too concerned about short term losses (if they even have any). I'm sure MS would prefer Xbox makes them profit, but that's not the sole reason for the console's existence.
Xbox is MS's foot into the living room space...a place where they dont have much presence. And while they haven't expanded on it too much outside of gaming it's an avenue they can exploit down the line.