Why would $99 make it sell poorly?
I don't believe this number, but I think it would be smart, and here are my thoughts.
1) $99 is a price point that parents would by the system for kids, nongamers might take a chance with a new system. A gamer would spend to have an exclusive title and secondary gaming system.
2) This price can be easily obtained. Remember Nintendo has invested and licensed the technology used to create the new controller, they didn't do all the R&D which saved them money. If this new Hollywood and Broadway are just minor steps up above the Gamecube then once again we are looking at cost effective machine.
3)Nintendo could afford to take a minor loss to help jump start its marketshares, if the system cost Nintendo 125-130 to make, and they sell it for $99, then you won't loss too much compared to the market share you will make up.
4)Nintendo can make losses up in selling download games, controllers, controller additions, the new controller shell as well as games.
5)If you are going to have an inferior system, people won't complain if it is priced at extreme budget pricing, however if it only minor savings then people will complain. $99-$150 I will spend for a new system, but I won't and will never spend $399. Several people will look at the price point and decide, this is better from me.
I hope this rumor is true, because if so I will be buying one with several launch games and controllers.