Microsoft hopes to make a small profit on each Xbox One console sold at launch this November.
Xbox chief marketing and strategy officer Yusuf Mehdi said at the Citi Global Technology Conference yesterday: "We're looking to be breakeven or low margin at worst on hardware and then we make money selling additional games, the Xbox Live service and other capabilities on top.
"And as we can cost reduce our box as we've done with 360, we'll do that to continue to price reduce and get even more competitive with our offering."
Mehdi also said Xbox One is currently in full production after Microsoft boosted the system's CPU from 1.6 GHz to 1.75 GHz.
"From a market demand perspective we've been sold out on pre-orders of Xbox for couple of weeks now," Mehdi continued. "We've built more than we've built for an Xbox launch. We are on track to have the biggest launch we've ever done by a wide margin for a console. I expect there will be multiple millions of people enjoying Xbox through the holiday."
Microsoft said last month that Xbox One's launch had been delayed to 2014 in eight European countries due to Kinect localisation issues rather than supply problems. Xbox One will now launch in 13 markets this November priced at £430 / €500 / $500. The Xbox One release date will be announced later today, a pair of UK retailers suggested this morning.