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I guess I'm the only person who thinks Sony should have launched the system at $299/£269 with each system containing 16GB flash memory. They should have kept propriety cards but exclusively sold the 32GB cards for $70/£50.

Obviously the above price of the system isn't a Mass Market price but that shouldn't matter at launch if you manage to secure your core market. Here is where the Vita failed, I'm not a phychologist but heres my theory and its based on how I initially reacted, as I was planning to get one at launch but didn't. Before E3 2011 people were speculating $349-400, and $300 was considered a price we'd be lucky to get and one which Sony should aim for.
once everyone found out the price was £250, everyone was like "OMG thats such a bargain, its the same price as the 3DS!" (prior pricer cut).

Then people found out they had to spend an extra $60 (current price of 16GB card) to realise the systems full potential and suddenly it was like their candy had been taken away. Not only that but the way you perceived price varies according to the product in question and paying over $50 for a mere 16GB memory card and $100 for 32GB creates the perception of "Holy shit, thats extortion, theres no way I'm paying that much for a memory card!". However had that memory been bundled with every system and partially included in the price (flash memory is cheap!) then it would have been easier to digest because you were spending $300 for complete experience, the best Handheld experience ever!

Games have obviously been a factor too but the Vita launch months were better then most in my opinion (especially the 3DS's). The mistake they made was not securing games for the japanese Market, as it is the japanese developers who will put their A team onto handheld titles, as opposed to outsourcing them to Niilstic games or ignoring handhelds completely as many western devs have. Its also the japanese titles which have a history of selling on handheld consoles in the west. Final Fantasy Type 0 should have been a Vita launch title in japan and released over here in the systems launch window, That one title would have created created a snowball effect and I don't believe the Vita would be in the position it is today. Sony has missed another opportunity to get a killer PSP title onto the Vita in the form of the upcoming One Piece: Romance dawn, the last title in the franchise sold 600k in one week for those unfamiliar with its popularity. The game arrives in fall but if there was any chance of it coming to Vita on time, it would have been announced by now.

However I think the system has potential to be a long term success and I think it will. Lets see how well Soul Sacrifice and PSO2 help the system early 2013 in Japan.