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This would affect mainly the SOC and RAM, however other optimizations/cost cutting and higher yields can also reduce cost (however these factors did so too before)... From the look of it the PS4 is already pretty thightly integrated, which is a good thing, there is no apparent waste in its design, unlike the original PS3 versions that had all those USB ports and card reader slots (I would have liked a "deluxe" PS4 with a 1TB drive and 4 or 6 USB ports).

I think the market pressure will drive the XB1 to a lower price pretty soon, with that 75$ coupon MS is offering to some people you can get one for essentially 325$ now? That's pretty low, but this is because demand is lower than they would have wanted, for a lot of people getting an XB1 remains a compromise...

I wonder when Sony will drop the price of the PS4 before or after the holiday season? and it will probably be by 50, not 100$, and when they will release another SKU with a bigger drive or some other meaningful hardware changes.