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Taking advantage of the 45nm manufacturing process and using smaller (laptop) disc-drives both Microsoft and Sony are in a position where they could probably reduce the size of their console by quite a bit ... Unfortunately, I suspect this would reduce the systems to the size of the Dreamcast, Gamecube, PS2, N64 and Playstation at launch, and not with what we typically consider a slim-line system.

Personally, I wouldn't be surprised if Sony and Microsoft waited until they took advantage of the 32nm process before they released a slim-line system.