Putting some more thought into it, that may not be the case. KTM does not make lots of any model bike (compared to the Asian brands). Around here, the only KTMs that are steeply discounted are the 4t MX models. I don't know that I have ever seen a 300exc/xcw on the showroom floor, they fly out the door.
My point is that KTM seems to be doing a very good job of generating very high demand for their fairly limited number of motorcycles. The more models they are able to put an engine into, the better and this will make 3 models for the 350.
KTM already has a loyal fan base that will snap this model up and feel that it is a great value.
Will it convert other riders to drink the kool aid???? Hard to say. The 950/990 are ridden and enjoyed by people that had not sipped the kool aid before and KTM is a much, much bigger brand than it was 10 years ago.
The more I think about it, the more I think KTM may do fairly well with this new machine.
Not that my opinion matters.