During the conception of the original Xbox, Microsoft is said to have considered several proposals, including one that meant giving the console away for free.

Talking to GamesIndustry, Xbox co-creator Seamus Blackley revealed:

In the early days of Xbox, especially before we had figured out how to get greenlit for the project as a pure game console, everybody and their brother who saw the new project starting tried to come in and say it should be free, say it should be forced to run Windows after some period of time.

Oddworld Inhabitants' Lorne Lanning also shared details on how Microsoft approached his studio to lure his title Oddworld: Munch's Oddysee away from the PlayStation 2 to the Xbox, with the hardware vendor highlighting the console as primarily targeted towards casual gaming:

At the time, Xbox thought that the core market was going to be casual. They were going to be the casual gamers' machine. Now, that's why they approached us because they said 'we think you've got something that competes in that Mario space and we think Mario's the thing to kill ... We see that space. We want that audience. We love Oddworld so why don't you get on this bandwagon? And we might give the box away.'

So now you're like, 'look, if you're going to give the box away, you're going to win. If you're going to win, we want to be on board'.

Blackley stated that several ideas, including one to acquire Nintendo, were tossed around during the initial days of the console. As it turns out, Microsoft did not give the original Xbox away for free, with the console retailing for $299 in 2001.

Source: GamesIndustry