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lapsed_gamer said:
I will state again what I believe the Arcade is for: it is to compete with the PS2. And it was successful until the most recent price drop. (As many have said, the $99 PS2 is a good thing to look to before counting out price drops.)

If MS can limit the sales of the console Sony makes the most money on, it will limit what Sony can do to really push the PS3's price down. I also believe Sony is worried about this. If they cut their price by $100 and the promised Microsoft answer creates a $150 Arcade, not only are they losing money on the PS3, but they have effectively killed off the PS2.


I think that the most probable outcome is Sony drops the WiFi support and maybe drops the HDMI to 1.2.  They may even go with a cheaper shell with a cheaper finish.