Selling consoles at a loss seems to be the new paradigm, but so far only the Sega Dreamcast and the Xbox have been done that way (the PS2 was close when it launched, and cost far more to design than the Dreamcast or Xbox, but was and is cheaper to build). With the $399 list price for the real Xbox 360, Krazy Ken insisting the PS3 will be teh expensiv, and Nintendo putting together a much less expensive machine by, well, making a less powerful machine, I think the only way console makers take big losses on hardware in this generation is if there's a Sony/Microsoft price war. There's a decent chance of that (I can't see why Microsoft wouldn't start one), of course.