Someone put together a
graph of gaming console prices over time. Most interesting is that Nintendo has always kept their machines at $200 and, adjusting for inflation, that means that their consoles have actually gotten progressively cheaper as the technology has improved. Compared to such outright failures as 3DO and Neo-Geo, which set their price points far too high, it would seem Nintendo has found a perfect price point..
That means that the new Playstation 3, at a whooping $500 or more, might prove to be simply too expensive for people to justify buying it. However, it's worth noting that the aging gaming population (more 25-35 yr olds play video games these days than any other age group) may in fact
want more expensive hardware. bling bling, baby. Add that together with Nintendo's cuddly personality and the Mario brothers boys might find themselves sinking in a competitive market.
Nevertheless, with the Nintendo Wii, PS3, and Xbox360, it would seem that the market is certainly going to be saturated come xmas '06. Me, I'll just wait for those ebay specials in a year or two.