E3 2017 - Microsoft exec Phil Spencer confirmed that the company isn't making a profit by selling the Xbox One X at $500.
Microsoft isn't making a profit on its new 4K-ready Xbox One X system, and that's okay. Console-makers typically don't make a profit on hardware, but the software and service ecosystem that powers the hardware. This has been true for Xbox for quite some time, especially after its cross-platform union with Windows 10 PCs, effectively turning Xbox into a service rather than a console platform. Microsoft's new $499 Xbox One X console is definitely the world's most powerful console to date with its 6TFLOPs GPU and native 4K gaming support, but the hardware is just the gateway to the real lucrative core of console gaming: software, live/subscription services, microtransactions, and other monetized content that spans a years-long tail.
In a recent interview with Business Insider, Xbox division head Phil Spencer confirmed that Microsoft isn't selling the $499 Xbox One X at a profit. Unless you're Sony, who's banked very hard on hardware sales with its 60 million strong PlayStation 4 userbase, software is typically more important than harwdare.
"I don't want to get into all the numbers, but in aggregate you should think about the hardware part of the console business is not the money-making part of the business. The money-making part is in selling games," Spencer said.