[freehunter]

There's the concept of a loss leader: you lose money on one product because it gains the company money when the consumer buys another product. Remember that the Xbox lost billions year over year for 8 years until it was profitable.

Microsoft has repeatedly shown us that they're playing the long game. If they're predicted to make money even a decade from now, they'll keep posting losses until that point comes (Xbox). If they're predicting a failure, they'll very unceremoniously pull the product (Kin/Zune). To steal a line from Breaking Bad, they're not in the software business. They're in the empire business.