The XBox was a horrible money loser because it was a PC in a small case, and there where limits to how much Microsoft could cut the cost per box. Microsoft still looses money per XBox unit sold.

One of the points of the XBox 360 was moving to designed hardware from the ground up so it could be cheaper per unit. Don't know if MS will be taking a loss per unit on the XBox 360, but if they do it will be less.

Microsoft's game unit has only made money one quarter since the XBox came out, when Halo 2 hit they sold so many copies they managed a one time profit.

Jay