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I believe that sales of the 20gig were poor, but Sony also probably wanted to get rid of it, because of the higher loss per unit, and less ability to push downloadable content.

I don't think consumers like the multiple SKUs for videogame systems... They don't understand all the differences... People generally I think go for the model they see presented as the "standard" or the "norm", and in this case Sony, retailers and the press all presented the 600 dollar model as the standard... Additionally, early adopters are largely the "hardcore" who want the top-of-the-line model.

However, Microsoft better hope that consumers don't simply view the top-of-the-line model as the "standard" automatically, or they've just effectively raised the price of the 360. Personally, I think the Elite will largely be viewed more like the different iPod SKUs, which have been differentiated very well... People know the shuffle is "the one with the clip", the nanos are "the little colored ones", etc. With the Elite, people will know its "the black one with a big harddrive," and as long as MS keeps pushing the Premium as the standard, they'll be okay.

"[Our former customers] are unable to find software which they WANT to play."
"The way to solve this problem lies in how to communicate what kind of games [they CAN play]."

Satoru Iwata, Nintendo President. Only slightly paraphrased.