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As the Wii U is already very integrated there aren't many places to cut costs. Dropping the GamePad or the disc drive isn't a real option.

People who think that the Wii U isn't worth 299 US$ also won't buy it for 199 US$.

It is the other way round: if there are some games you want to play, it doesn't hurt that much if you pay 199 US$ or 299 US$.