LMAO at these pretend intellectuals waxing about sound business decisions. Only in magical happy videogameland is a hardware manufacturer expected to take a loss.
Imagine this line of thought in any other industry and you'll realize how absurd it is.
Look to the ipod and you will find your answer. If Nintendo brings their product out but it is perceived as cheaply made because its priced under expectations, it won't catch on. Part of iPod's continued success over better made products at a cheaper price is because of the perceived value, not actual value. Everyone KNOWS that if you have an ipod you spent money. Like a pair of nike air jordans back in the day. It's a status symbol. A lifestyle.
Or look to the PS3--It's technology that might very well be bleeding-edge but the world may not be ready for it (look to the sound/music industry for examples like DAT). They could end up losing both ways--not only buy losing money on each console made, but also by pricing themselves out of the market. It's a lose-lose situation and Sony has to be scared right now.
The trick is to find that magic middle number where the price is just outside of the majority of markets so that value is perceived, while not being so overpriced that it creates a barrier to entry, and at the same time raising awareness to the coveted status symbol or "with-it" crowd.
Some of you going on and on about how awful this price is might very well be justified in comparison to other less fiscally (and marketably) sound institutions, but those opinions really are just personal and have no basis in reality. A marketing/advertising class would help you learn some of this.
