Its not a full fledged console thus not many people will buy it. Even casuals have enough sense as I've seen in the past few weeks. Now if the pro was to hit $199...

Are you insane?  I bought it.  I can get a HDD used and then it's the exact same thing as the Pro AND cheaper.  I think you underestimate the economic issues in the world and how much $100 means to a LOT of lower income families.

This^ and let me add the 360 has all the games that any person would need!

Wow.

Marginalizing sales already?

Guess the price drop effect wasn't that much if 360 fans are pre-marginalizing.

Don't just assume that because the price point is lower that the casuals will buy it. Same goes with the ps3, don't assume that just because the PS3 lowers in price means that casuals will all the sudden get it. It helps but both systems do not have the right image that is needed for casuals and lack the games for casuals. The main problem is the image though, we all know that the gamecube at $100 didn't mean that all the casuals were getting it, it didn't even help that much. Once a systems loses the public eye it's really hard to get it back.

Casuals may have enough sense, but a parent who does not make exorbitant amounts of money it may not have enough sense. I find it somewhat insulting that you would label a person senseless for purchasing an arcade sku. Are you implying that people with less money are senseless?

It plays all the games available for the system. How isn't it full fledged for a game console?*

*ok, except some mmorpg and some soccer manager game.

If the current pricedrop ever hits Australia before xmas, I'd most likely buy an arcade purely for the xbox's library of JRPG. I don't believe the additional HD or Live is neccessary for these game and it will sit nicely in the living room along with the PS3 and the Wii.

Yes the price can be a MAJOR factor.

Arcade sales only account for around 10% of new X360 retail purchases. HDD is essential for gaming on XBox 360. 20GB HDD being recently replaced with 60GB HDD.

You're wrong.

At the previous price points the Arcade made up 20% of the sales, the Elite made up 20% of the sales, the the premium made up 60%.

And that was with the Arcade costing 80% as much as the Premium. Now it costs about 66% as much. The price difference is greater and the relative price difference is much greater. Expect the Arcade to absorb a lot more than 20%.