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The PS2 has to end at some point. For all we know, this is merely a stepping stone to clearing out inventory, and when the inventory is cleared, the PS3 gets full software PS2 BC and PSN downloadable PS2 games.

It's good business, no matter what way you look at it. The cheaper PS2 will almost assuredly take more Wii and X360 Arcade sales than PS3 sales, even if its not very many overall.

I fully expect to see a PS2 boost in the coming weeks. Not bad for a console which has sold nearly as many units as the 360, in the same time frame, and probably commands a hefty % profit per unit.