This scenario is way too unrealistic to really vote one way or the other. If they get no royalties than, from the companies perspective, option 2 is the only viable option since you'd try to sell the system for $200 more. If royalties are taken, then option 1 is what will happen (assuming no competition which would affect the price in the real world). It's just outlandish.
From the consumer's perspective, I picked the second one but it wouldn't matter since companies dictate the price.
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