They might be slowly crawling out of a big hole, but that doesn't mean they're not doing well. I'd argue that the cost so far should be considered more of an investment than a loss. They entered a difficult market dominated by two large players with a lot of brand/name loyalty (i.e. fanbois) and huge barriers to entry. Over the last 8 or so years, the Xbox brand has become number 1 or 2 (depending on which metric you use), beating out the last gen's leader (Sony). They've also become the leader in the online console space where profit margins are high and revenue is recurring (think WOW).

All this isn't to say that MS won't mess up the courier concept but that they're better than many people give them credit for.

Except that "how well they'll stack up" with Apple isn't measured in profit; it's measured in sales or market share. While the Xbox might not yet be net profitable, it does have enough market share to claim that it stacks up with its competition. I'm not saying the Courier will be competitive, but I hardly think you can, a priori, write Microsoft off in this market.

The question I pose to you isn't - is the Xbox hardware profitable? It's - is the Xbox software profitable enough to make Microsoft a profit taken the hardware into consideration. If so doesn't that make the Xbox profitable? HP and other printer company do kind of the same thing. They sell the printer at a loss and make money selling the ink.