Yes You. Can. Dude, do yourself a favour, stop embarssing yourself and go give yourself a history lesson on Microsoft's financial decisions regarding their consoles.
Fact - They were willing to take a HUGE (not really, but by your palty standards) risk with Xbox, lost billions, moved onto 360.
Fact - Lost billions on the 360 too, then reaped it back in the latter part of the gen.
Fact - The EDD/360 is making significant money now. So they have a buffer, something they've never had before.
Fact - If they deem it important enough, they will swallow a $bill ($100/10 million consoles) to gain parity with PS4 and it still won't come close to losses made on Xbox and the early days of Xbox 360.
They have a history for this, they have the funds, and you think $1b is a risk?? They lost like $600 million from Danger a year or so back, $1b is nothing to MS and it's overlooked.
But consoles aren't the only thing that Microsoft has to worry about. That's what your not getting. So they take a hit on Xbox...Okay..On the other end, PC sales are declining. This is not 2006 before Tablets and Smartphones were running the show. Windows 8 is not gaining any traction. WP8 is not gaining momentum. A reconstruction did not happen because everything is going right. Just like everyone else, The same thing can be said for Sony. They lost lots of money as well due to
A) Because of their ongoing old age incompetence to adopt and adapt to new technology,
B) Putting investments into meaningless things that never brought back any returns
C) A lot of natural causes that cost them billions to fix (earthquake etc)
D) The Japanese Yen that was too strong to help them compete against the Koreans..
Etc..
So surely, MS can take a hit for bring down the price but it's not something , in your terms, they can just eat up and take..They are an entire business, and they do not only operate on Xbox terms.
Edit: And how would losing to Sony be a bigger risk? The cost isn't the issue that will cause MS to lose to Sony....It's the message that will cost them. Look at Nintendo, the Wii U is cheap, and a more argumentatively speaking, innovative product than the PS3/360 so why isn't it selling as much? Because the message is not clear. Microsoft needs to work on why paying so much money for an Xbox One makes it better than Sony. Dropping the price doesn't always do that. Obviously Apple gets away with making people pay out the ass for iPhone, iPads and Macs because they tell you why it's better. Sony still has yet to do the same thing for their products and that's why they continuously lose money. If your Tv is 800 dollars and Samsung is 600, why should I buy yours?