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They would need an absolute fucking BEAST of a lineup to do well, and other great incentives. With a $50-100 profit on each system maybe they'd make quite a lot of money, but what would probably happen is it'll have a small install base, making third parties less inclined to support it, less software sales... It won't be able to take the same liberties the PS3 took with price and support because the brand doesn't have that kind of power anymore.

And taking it out of its own bubble, Microsoft can afford to make a cheaper AND more powerful or similarly powerful console, and the Wii U will be almost 1/3 the price at times...

I think it would ultimately lead to the death of PS.