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I think Sony should slash the price of all the proprietary memory cards in half (e.g. the 32 gig would be $50). They still wouldn't be a great deal or anything but the entry price point for the system would be lower and it would attract a greater number of overall users.

Also as much as I love Sony's first party output, I agree that they should be using the money to court third parties and gain killer apps for the system. Some popular Square-Enix and Capcom titles would really help the system in Japan.