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I think people focus too heavily on the price alone ... Certainly, there are a lot of people who would never consider buying a console for more than $199 (or possibly $299) but simply lowering the price to $199 (or $299) will not make these people buy your console.

What is truely important is how your price, features, bundles, full priced game library, value priced game library, and marketing campaign compares to your competition. If your console is $100 more than the competition your entire package has to justify a $100 increase in price ... If your console is $100 less than the competition you still have to have an appealing product for your competition.