I'm thinking about changes to the box that can be made, like fors instance, reducing flash memory.

What about reducing the screen size of the controller?

Well... If you are just talking about lowering the price, (sacrifice be damned) all you have to do is just get rid of the gamepad... If you get rid of that, then the wiiU does not require the gamepad or the super low latency streaming tech which probably will cut the cost of a console by at least $100 if not more. But the downside is that it will split the userbase and they would have to rework a lot of the settings and patch a lot of the games that are based around the gamepad or have gamepad functionality

Price/Cost isn't the problem...

They could make the Gamepad smaller, both the screen size and the controller itself. That's the only thing that comes to mind that is an easy way to lower the price.

Edit:  Regardless, that will be a very minor price reduction, far from the drastic difference you are looking for.

The answer is they won't. A Wii U costs 180$ to make and with it being 299.99$ they would only get 120$ for profits which isn't that good already. It won't happen and it shouldn't. It's cheaper than the other consoles by 100$.

I hear refurbished goes for $200

Only $180?  Really? 

You should include in your OP that dropping the Gamepad is not an option.

Other than that, I'm not sure they can.

Its memory is already incredibly low, so they can't really reduce the flash memory.

Actual cost is 228$ excluding R&D, Marketing, Shipping, and all other non part costs. No idea where they got the $180 figure from

They should improve the value, not lower the price.. Throw in some digital games..