Pricing of Xbox 360

When Microsoft launched the Xbox 360, it charged the consumer around 399 dollars for the premimum package. At that time I was curious on how much Microsoft profit was from the sales on it's systems. It was only later did I found out that they were actually losing money on each xbox they were selling. They were hoping on selling large amount of games in order to make up for that loss. I thought that was a very interesting idea and a risky manuever. But in Microsoft case it can take that challenge based on the sheer money reserves it has. But just say for a medium sized company, it will be a very difficult for them to accomplish this marketing feat. Depending on their economic strength they might not be able to convince the lenders they are borrowing from agreeing. I think selling low and taking a loss is a very good idea to market a new, unknown and expensive product. It allows people to overcome the price obstacle while discovering what the product is all about. For the company to make this strategy work it must market something that causes people to continuously buy something from them like games for the xbox 360.