I believe they want market share more than they want profit. XBox for MS is a way to get Windows on the living room. They want Windows on PCs/tablets, Windows Phone on mobile and XBox in the living room, all of them with one app store. If XB1 doesn't gets the market share, they lose one of these markets. 

In the end, fighting for market share makes more sense than fighting for profit. The one with more market share can determine the rules and that is a pretty easy way to maximize your profits and crush competitors. An example would be CoD DLC deal with MS. If 360 had only 20% of the share and, let's say, 80% of the CoD sales were on PS3, MS probably wouldn't have made the deal, simply because Activision would prefer to reach the higher sales of the (in that alternative world) dominating platform. So the point is, if you lose market share, your dominating competitor will use that to kill your profit.

And seems that gamers didnt have a problem with the PS3 dropping in price $100 per year the 1st 3 years.  The PS3 ended up doing rather well right?   The biggest reason that the 360 had so much success vs the PS3 is that it offered something different and because of the HUGE price difference and the lackluster PS3 software.

That seems at odds with their pricing then.  We all know Microsoft is a massive company and could could billions on Xbox over course of a generation and still be well into the black overall.  A $499 system is not a strategy to achieve market share, especially when most reports indicate they make a small profit on each system. A $399 would show desire for market share, a $299 would show that is their only concern.  I think there is pressure on the division now to not be a loss leader or they would have adjusted pricing before launch.

X1 regardless opened to double 360s launch and this serves to keep momentum going. It is a good business decision, especially that all territories titanfall bundle.

You're under the assumption Samsung still make good phones.  Though what are your parent's running in the background?  I have a 3 year old Xperia play and it's smooth as butter.

I can see why they chose to cut the price in the UK. That is where they are struggling the most in competition with the PS4 and by lowering the price if may give them an equal playing field in the UK while also being a testing ground for if they want to do this later in the US. The Xbox One is far from a failure, just like the PS3 was far from failure, but neither were as dominant as it's predecessor.

They weren't struggling the most there. The PS4 was outselling the X1 1.5:1 in the UK. That's a much lower ratio than many other European countries.

and jack tretton said the Vita would get first party support. so yeah, sometimes i just dont believe what these companies have to say about some things.

Player hosted servers are very unreliable. Point invalid

How so? Never had problems with them (I avoid people with 55k modems!) especially irrelevant when you play with friends only. Again keep the fee for people that want official servers. Everyone else does not need them especially when playing with friends only.

I play every game on player hosted servers I cannot recall the last time I played on official servers. I have no problems at all and if something does not work its on PC and because someone has a firewall issue thats non existing on consoles.

Point more than valid.