in 2006 it was nowhere near as bad as it is now. tablets weren't even a thing yet and smartphones were still incredibly rare. the high-end phone experience at the time was like a $99 Razr with no data plan. now many people want a $200-400 tablet, a $300-400 smartphone and many of these people are upgrading yearly. the price crunch on these console devices should've been tighter than ever.
I don't think Tablets have have hit that "must own" category yet, and most smart phones are subsidized in the US...so for many, it'll be <$200 dollars.
There is of course more competition now, but if Sony can demonstrate the value of the PS4, then $400 is I think reasonable price to debut the console.