First they make cheap silicone and then they reduce the size of its chip manfacturing process(65nm).Even if MS sells those arcade's at a loss, it's all about getting the installed base as large as possible for the software to sell.
Still somebody thinks that they are selling it in loss then he is .............. i have already stated many times!lol
Ms does not know anything about loss.
Its sony who always gives quality,satisfaction and value to their customer!