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Question: How is the PS3 in the 360's price range when it's still 100 dollars more than the arcade?

When Sony loyals argue about price for the last year, they always used the $199 Arcade as why the PS3 isn't selling out. Now that the PS3 knocked off $100, why are people are comparing it to the $299 Elite instead of the $199 Arcade?

Being in 2nd feels so much better than being in 3rd