The market doesn't want a $199.00 Core, its wants a $199.00 Premium. A $199.00 Core isn't going to be a major sales driver in comparsion to its big brother with a similar price cut. Even if MS threw in a free memory card into the Core sku, it would still sell poorly. The Core can't drive sales of the 360 brand because people want the HDD, the Live Starter Kit, the HD cables, the headset, wireless controller, chrome trim and also the name "Premium" . Most buyers see the extra $100.00 as a worthy investment.
MS would be better served cheapen the "Premium" experience rather than augmenting the "Core" experience.
Agreed. The core is a flop, and no one is interested in it. Increasingly, I see more people going for the Elite version, because of HDMI. For me, Sony is well in it, because there's only a $50 difference between the Elite and PS3, and the 3 major games next year (FF XIII, GT5 and GTA4) are all on PS3.