The market clearly signalized the price was over the point so a cut was unavoidable. By cutting deep they are preempting PS Vita, as Sony is probably already taking a big loss at each sale and have much less room to maneuver. I guess Nintendo was, from beginning, planning this strategy: lets sell the 3DS at a big margin to early adopters and cut the price depending on how much Sony will ask for Vita. The problem is that they set the value too high. I believe if they started the sales at $199 it would not look so bad when the cut it today to $169.
Still, much of the DS sales is for kids, as the price is low and the product is quite resistant to abuse. Hopefully, the 3DS will now reach that market, although I have seen a lot of DS being sold this day to small kids as parents take the opportunity of the low prices.
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