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I don't read too much into the 2.5 number for a couple of reasons. 1. It was a local Fox station and how would they know? 2. It does sound like they divided 1,000,000,000 by $400 and came out with 2.5 million. So they are assuming MS is replacing all defective 360's with brand new premiums. They are also basically saying that 25% of new 360's are defective and not accounting for repeat consoles. I don't think it's that high. 

There could be hundreds of factors that go into MS's 1 billion loss statement. Like, Shipping, Manpower, parts, storage, CC transaction fees, electricity, etc. I know it sounds dumb but companies factor in even the smallest things when calculating cost.