Let's get this myth out of the way right now. Google are *not* breaking even on their tablet. COGS is more than just BOM, and there's no way in hell that COGS is under $199/unit. Costs will drop, but initially, Google are putting a lot more in than they're getting out. That means they're losing money.

Personally, I think MS would be stupid to enter this race trying to play the console game. It's not the same thing and I'm afraid they'll get badly burned for it. There's nothing wrong with a $199 price point, but losing money is not a workable long-term strategy. It's possible, though not probable, that they can make a tiny bit of money at $199. I just don't see how at this time. Maybe their deal with Apple didn't involve any monetary expenses. Maybe they're in this only to disrupt the current market - again, unless you're intending to make money, it's not a workable long-term strategy.

We'll find out soon enough. We'll also see what Apple has planned in a couple of months. There's one thing I know for sure however, it's that Apple will not be selling their product at a loss or even a break-even amount.