OK....Microsoft are already losing around a hundred bucks each console sold. And then they have the whole THREE free games thing, and that's another three hundred gone. So four hundred so far. But then, they have also reduced the price to almost match the Gamecube, and so, in Australia, that's four hundred lost. so totally 800 big ones. Then, they're rumoured to be releaseing XBox Lite, at 100 dollars cheaper then the normal XBox. So that's 200 hundred bucks lost for every XBox Lite sold.
But now, the THREE free games deal is over (or is it?), but in Australia (dunno about the States or Europe), they still have a 'one free game with XBox purchase'. But they're also losing money (probably)from all the R&D time they're spending on creating an XBox lite.
There are probably more free deals for XBox that I don't know about, so that's more money out of the wallets.
Confused? I sure am.

But it all means that Microsoft is losing a SH!TLOAD of money on XBox. And moreso with going ahead with XBox Lite.