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The external HDD is a piracy issue, I'm almost certain.

While I'm sure you could use the internal HDD to pirate by swapping it back and forth between a PC/PS4, that would require much more work that most people wouldn't be willing to do and I'd assume internal HDD's are less prone to that sort of thing anyway.

But yeah, introduce a premium SKU with 1TB for now and increase that later in the gen to 2TB when it becomes necessary.

Also, their financial situation is not nearly as dire as it was a few years back. They can take a hit on each PS4 sold and still come out well ahead. In addition to that, they may not even take a hit on a $300 PS4 at this point. We never knew the original manufacturing costs to begin with and something tells me those teardowns trying to estimate the cost were never accurate either way - We're talking about a mega corporation who's helped create the technological industry we live in today. They no doubt have long standing partners who give them absurdly cheap prices, coupled with the fact that this entire generation was created to be profitable from the start/as early as plausible.