Pat Farrell wrote:

I predict that the price of the SqueezeBox2 will go down slightly
over time. Then sometime in the future, an new cooler product will
come out at about the same price as the initial price of the
SqueezeBox2.

Intel has done pretty well with this business model.

It's a pretty standard model. The first few runs of the new hardware were probably relatively small, so that any bugs in the new hardware (such as the processor unseating, and the capacitor in the analog out stage, etc) could be worked out before the next run. As the bugs are eliminated, subsequent production runs can be larger, and per-part prices drop.

- Marc
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