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They most likely did blow it pretty badly. The Go was already a tough sell, because of the lack of UMD drive. Not nearly as many people have experience with digital distribution, and I know many people are uncomfotable without having a physical copy.

Selling people on that just got a whole lot harder by charging so much for something that most people would see as less than the PSP-3000. Not only is it missing a UMD drive, but has a smaller screen. Ick.

While we won't know for sure until it actually goes on sale, this seems like a hardcore fail on Sony's part. Which sucks, because I really like the PSP and want more developmental interest in it. Ah well, at least there's several pretty good games coming up in the next 18 months.