Agreed. I was fairly shocked at how well the 360 sold over the past year, actually. I think it is too expensive. I think the market for an $800 console is even smaller, no matter what the brand.
The amount of people willing to pay a premium over retail certainly appears to be less than the amount of people willing to do the same for the 360 (of course, because of the difference in retail prices, that premium is even greater).
Bobbler: While I agree that the stories are somewhat 'suspect', I find the complete absence of such stories a year ago when the 360 launched to be an interesting comparison. A year ago, there weren't any stories about people walking into stores in December and being 'lucky enough' to find a couple of 360s sitting on the shelves. At least, not that I remember. Correct me if I'm wrong.