Microsoft believes it “will outsell the PS3 in 2010,'' says Greenberg

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The $299 XBox 360 Elite 120GB sell much more than the $199 Arcade XBox 360.
So it is actually a $299 PS3 120GB competing up against a $299 XBox 360 Elite 120GB. $199 Arcade XBox 360 is competing against the Wii which is priced at $199.