I'm not sure criticisms around cost are as relevant as they used to be. Windows 8 Pro currently sells for $40 on Microsoft's website, and yes, that key can be used to perform a clean install. If you paid $40 to Microsoft every three years when they released a new Windows version, that would work out to $13.33/year.

That isn’t exactly expensive... $13.33/year is basically a rounding error compared to the costs of console gaming.

But you pay that 40 dollars at once, and it's on the price tag of the SteamBox you would buy (if they go for a Windows box). So, 40 dollars on a console price is actually a lot of money, since most console hardware is sold at 300-400 dollars point.

The xbox360 core launched at $300. Assuming prices of the next generation are fairly inline with last generation, then yeah that's a ton. I have no idea what the cost to Microsoft on those units where, but I remember here they were either sold at a lose or with almost no profit. 13% on the BOM is more than significant especially when there is a viable alternative.

But if you're competing with a $500 PS4, you're going to have problems. Even when you throw in price savings with scaling and a colossal subsidy, that's the retail equivalent of building a PC which competes with the next-gen consoles for $800 or so. So a marginal $40 is a lot of money in that.