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One more thought:

This would be the 3rd price drop by Sony in under 6 months. But none of the price cuts we've seen have been "straight up".

What are the chances that this price cut is just more finagling of the PS3 models? Could it be that this is a 40gig "fire sale", intended to leave the 80 gig as the sole option? Or maybe there is a 120 gig model in the pipeline, and in 3 months we'll see yet another round of price shuffling, with the 40 gig discontinued, the 80 gig at $399, and 120 gig at $499? Or perhaps the "discounted" 40 gig will be bundled with games/cables/feminine napkins which will raise the cost higher?