and being closely tied, Microsoft can charge themselves a lot less.
So, the OEMs can never compete with Microsoft on price irregardless how high they raise the price.
I would think that a large OEM, with all the supply chain advantages that are implied, could easily compete against a Microsoft device.
Think about Samsung, for example. They have factories build RAM, displays, etc, that - by your logic - could be almost free to the device building division. Microsoft has to BUY all that stuff from Samsung.