For this strategy to work, the XBox must be a hot item. If it's not, MS is going to lose a lot of money -- and even worse, mindshare.

For starters, I wonder how Walmart is going to deal with this. They have a lot of power, too. Let's suppose they decide not to sell the XBox:
-- if the XBox is hot, Walmart will lose some sales
-- if people just want a video game, MS will get thumped

Advertising can only do so much; just think of some expensive movies and TV shows that have flopped despite massive amounts of hype.

My guess is that this will contribute to a massive XBox flop, especially because the economy is tight. The $500 XBox won't look so attractive (besides the fact that it's fugly) compared to a $200 Gamecube or PS/2. I just don't see parents spending much over $200 for Christmas presents.

Tony