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The arcade is priced just right, perhaps Microsoft is making a small profit on them aswell. It's the HDD or the Elite for that matter that is priced too high. I've seen it happen twice now in my friendscircle that a seperate HDD has been bought after buying an arcade. It's a smart move from Microsoft's side. They might not win this generation by any means but they might leave it with a profit + they have placed a strong new brand on the market.