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i read that NPD said that the 80gb actually OUTSOLD the 40gb in US

If that's true, we can pretty much lay this to rest. Do ioi and the team get data on the specific models being sold?

But apart from that, there are at least 2 reasons that discontinuing the high-end model would be absolutely retarded.

First, the manufacturing cost of the 80gb is nearly the same as the 40gb, but it sells for $100 more. That means that sales of the 80gb subsidize sales of the 40gb. Why would they give that up?

Second, it would alienate a large portion of their fanbase, completely (for the reason just stated) unnecessarily. It's not costing them anything extra to keep two models on the shelves, unless it's this nonsense about "consumer confusion" which is highly overstated. As the best article I've read on the subject said last year, Sony would be "turning their backs on their most important potential customers: PS2 owners" (paraphrased).

Yes, the high-end models have been discontinued in the other regions, but remember that in the case of Japan it was the fully hardware BC models, which cost much more than the 80gb, and in Europe they may have simply been phasing out the software BC 60gb in preparation for a global standard. All of this could just be a precursor to a software BC, 80+gb PS3 with a new game bundle.

Sony has done some stupid things lately, but I'm not ready to believe they'd screw themselves and us like this.