I ultimately think a console's must-own value tends to be the software itself. However, a cheap price would put Microsoft in a great spot. Imagine the rumored Lockhart being $199.99 and the Xbox Series X only $399.99. Crazy low prices and Sony would panic. They'd either have to price that low as well and take an even bigger hit than they probably already will with profit, or price higher and risk losing a lot of market share.
A $199 next gen console doesn't make a whole lot of sense tbh. First of all it would seriously fragment the Xbox install base with a huge performance gap between both platforms. Developers won't be able to really tap into those 12Tflops of the Series X and "code to the metal" as everything has to run on a 4TB Lockhart too.
Secondly, people expect a next gen console to be around 399 - 499, so why make it 200? Everybody is familiar with the concept of buyers remorse and "you get what you pay for." I mean there's a reason why people aren't buying $100 budget phones for example, even if they are almost as good as the $600 ones. Products can actually be too cheap for their own good and I would definitely feel underwhelmed if I could buy a next gen console, that's supposed to give me years of entertainment, for the price of one good night of drinking or 3 retail games.