I'm sure it will drastically enhance the Gamecube's lead over the XBox world-wide and substantially lessen the gap between them in the US but it won't kill the XBox or anything.
Really, the XBox should already be dead. Most companies would drop a product that is burning away such a ridiculous amount of money. But MS is obviously just using the XBox as its way to break into the industry, hoping the XBox 2 (and 3,4,5, etc..) will make them some money. I doubt it will happen though. The XBox 2 won't stand a chance against the PS3. So unless MS is willing to lose tons of money keeping it alive too, it might just decide the gaming industry isn't even worth breaking into it anymore. When MS decided to throw its hat into the ring, gaming was a gold-mine. Now it seems like just about everyone in the industry except Nintendo is losing millions and facing certain death.