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Well isnt it ment to be competing with the iPod/iPhone and not the PSP 3000, nor the PS3? The iPod Touch 3G is at £200-250. And the iPhone is at £270-600.

The 3000 is still supported and the GO is for new customers. Gaining profit on both handhelds from day one allowes you to try out the market and see how it responds to Digital Distribution amongst other things. They cant "fail", but you can argue that they could've taken advantage of the GO's potential in a better way.