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After the whole 70% figure came out, I did some thinking and even after reducing the chips to 45nm (RSX and Cell), and shrinking the mobo, the cooling system, and casing, I still could not see how they reduced the price by nearly $200 more all of the sudden. It would seem they are still about $50-75 short if those were the only reductions made.

Adding a better blu-ray drive and removing the hard drive and Wi-Fi does seem very plausible as it would mean no need for installs. Not all games would work though, or would need patched as some games REQUIRE the install or the use of HDD as virtual memory.