I've taken economics class, so I know how this method works.  It's the old "Cheap Razors, Expensive Razor Blades" plan.  You see, Microsoft sells an Xbox 360 at half the price it costed them to produce it.  Then in order to gain back their money they raise the price on video games.  It is a pretty smart plan, but it's also the reason the gaming industry is stuggling so much; most of the games suck and no one wants them.  While this idea is an overall good plan, there is, however, a point in which they lower the price so much that there is no way to gain it back.