It would seem logical, I would be willing to bet MS would be amenable to selling at a substancial loss if it meants beating the PS3 pricewise, and helping them take the format war.
The latest rumors swirling are that they will try to actually sell it lower than $200 so that they BEAT the PS3 in price, since formats aside, the 360 won\'t have some of the media playback features of the PS3. We\'ll have to see, most HD players in stores are about 500, but then most of the processing in the 360 can be done in the console, saving some cost on hardware.