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people arnt buying the wii becasue its cheap, they're buying it because it appeals to them. In the Uk a wii costs £180, you can easily find a 360 for £190 - 200, in some cases they have been on sale for £150.
Considering the incredible difference in hardware its obvious its not just price thats the issue here.
Ms are in a terrible position at the moment, being outsold by a marginally cheaper machine for one market and being outsold by a marginally more expensive machine in another.