This is one tatics MS used that really caught me off-guard. First they sold XBoxes at a loss to penetrate the gaming market a few years back, then now they pull this stunt which to me is a big challenge to the Apple or any other music distribution site. As they are basically giving a cut of the sale of their hardware to Music company, it will surely put lots of pressure on the others and I am sure groups like UMG can now take advantage of this deal to increase their bargaining chips the next time they neg. on their deal with other resellers. However, it is debatable if this is a "big brother who has a lot of cash throwing around to squash others" tatics or one that can really change how the music distribution industry works in the future.

And does this deal actually benefit the consume?

However, I must take my hats off for at least throwing me off the chair when I first read this. Pretty insane and highly effective strategy to penetrate a market.