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I think Microsoft is content the way sales are going, to be honest. They have more than a few tricks up their sleeve. Considering at the end of the previous generation, the Xbox was behind the PS2 by such an absurd amount, I think they can call the last four years a victory no matter what happens.

That said, do not be surprised if the arcade unit hits the 159.99 USD mark at some point. It would be most certainly a loss per unit, but I really believe that Microsoft doesn't mind hemmhoraging money, if for its "Greater food"