If Xbox 2 is going to be the cost efficient model, what are the chances of it launching at $199?
$299 is the sweet spot IMO. Go significantly over $299 and consumers cannot justify the price for what is essentially a high-tech toy. Go significantly below $299 and the perception is your system is underpowered. I think this generation demonstrated that you can launch a videogame system at too low a price. Consumers who were willing to pay up to $300 for a new videogame system saw PS2 and X-Box at $300 and Dreamcast and Gamecube at $200 and concluded, fairly or not, that the $200 systems were inferior. I don't think a $200 launch price for Xenon would be a good idea.