All consoles (at least at launch, and for years afterwards) are sold at a loss, with profits made up on the games. The difference for Microsoft is that the XBox

All consoles (at least at launch, and for years afterwards) are sold at a loss, with profits made up on the games. The difference for Microsoft is that the XBox division has never made a profit, unlike Sony's or Nintendo's. Note: the Wii is the only recent exception to this rule that I know of; the hardware has been sold at a profit since day one.