This is like a Cell Phone 2-year contract subscription model where the hardware "appears to be subsidized" by the carrier but over the course of the plan, you pay more.

You didn't read the deal carefully:

$15 required subscription per month x 24 months at minimum = $360
+ $100 cost of console
====================
Total cost of the deal = $460

You can buy the Xbox 360 4GB Kinect for $299 + $99 for 2 years of Xbox Live service saving $60. This deal is like an extra 15% charge over 2 years (hidden financing so to speak).

Also, this covers only the 4GB Xbox which is practically useless for storing games/demos.

This deal is actually awful:

1) It costs more than buying the same parts up front;
2) There are far cheaper alternatives that are better.

You can buy PS3 for $250 and have $210 left over to spend on games. PS3 doesn't need online subscription to play games or to use streaming services such as Netflix. Also, Sony is expected to drop the price of PS3 to $199 around E3(GameStop already had it for $199 with a free Batman AC game 2 weeks ago).

It seems ridiculous to spend $460 to play on Xbox 360 for 2 years. In fact, for us PC gamers, Xbox360 is the most illogical choice. All cross-platform and shooters are better on the PC and Xbox 360 has nothing worth buying that's exclusive other than Forza and Gears of War. At least the Wii offers a totally different gaming experience, while PS3 is a better media box (BluRay, free Netflix without required Xbox Live Gold subscription) and far superior exclusives than the 360.

Frankly, with Wii U launching in 6 months, parents are far better off grabbing that next generation console for their kids than Xbox 360 with Kinect gimmick crap for $460.

I think MS is going to be in a world of trouble next generation. PS4 won't cost $599 like last time. Unless Sony introduces a mandatory fee for online to use Netflix/game, PS4 will have an edge out of the gate since it will have BluRay and esp. since all rumors point to both of their GPUs being roughly equal (but PS4 will have an additional GPU courtesy of HD6550D in the A8 Llano CPU). MS better have a good strategy next round if they plan to capture hardcore gamers. As a PC gamer I had no reason to purchase the 360. Xbox 360 was exactly like a cheap PC.