I think they are getting rid of the 20 GB model because very soon it will be outdated by having not enough Memory to utlize the PS3 with downloaded "full HD" whole games.releasing in less than 4-6 months you would feal ripped off if you just purchase a machine and had to upgrade rightaway.Is microsoft still keeping the "core" manufactured,to me that wouldn't make sense if there is going to be a need for 120GB hard drive why would people still by the core or even the 20GB hard drive?I think sony is about to cut price on the 60GB PS3 very soon probly to the 499 level that the 20GB was at.I don't think sony will put out another "version"of the PS3 though the PS3 hard drive is easy to replace with a 120GB hard Drive and Alot cheaper than upgrading the 360.What is the Price for the 360Elite?its probly hovering around $450 right?So if Sony doesn't bring the price down they would be still 150 higher than the best 360(a bit too big of a gap) but if they drop $100 it will be around a $50 gap(not bad at all I would much rather have a $499 PS3 over a $449 360) that would be alot to offer for 50 bucks..I still think both the 360 and PS3 are a bit overpriced and close on quality except for the the Bluray format for games will be a big plus soon.The only real difference is how the 2 get the money.Sony blasts you once for the $599 while microsoft Nickles and dime you...$399 system ...$50/year Live...$99 WiFi....$199 HD-player(if you bought this ..sorry)....$20 plug and play...$179 Hard drive upgrade.I understand that some people don't need all these things but most will want them.the fact is if you don't care about HD movies its probly because you don't have an HD TV 1080i or 1080p which in that case your really not getting alot of the potential of either system.In the end this will probly help reduce cost on the 60Gb modle of the PS3 even more 1production line Vs.having 2

I believe that sales of the 20gig were poor, but Sony also probably wanted to get rid of it, because of the higher loss per unit, and less ability to push downloadable content.

I don't think consumers like the multiple SKUs for videogame systems... They don't understand all the differences... People generally I think go for the model they see presented as the "standard" or the "norm", and in this case Sony, retailers and the press all presented the 600 dollar model as the standard... Additionally, early adopters are largely the "hardcore" who want the top-of-the-line model.

However, Microsoft better hope that consumers don't simply view the top-of-the-line model as the "standard" automatically, or they've just effectively raised the price of the 360. Personally, I think the Elite will largely be viewed more like the different iPod SKUs, which have been differentiated very well... People know the shuffle is "the one with the clip", the nanos are "the little colored ones", etc. With the Elite, people will know its "the black one with a big harddrive," and as long as MS keeps pushing the Premium as the standard, they'll be okay.

Maybe I didn't word it well.  But look at it this way.  In US, you see on the shelves:

PS2 ($129), Wii ($249), 360 Core ($299), 360 Premium ($399), PS3 20GB ($499), PS3 60GB ($599).

So removing the PS3 20GB won't make the PS3 60GB look too bad next to its closest price competitor at $399.  Even more so once the Elite comes in at $479.

But in Japan, with the 360 basically a non-factor, all you see on the shelf is:

PS2 ($129), Wii ($249), PS3 20GB ($499), PS3 60GB ($599).

Now those aren't the actual prices - in reality Sony already lowered the price in Japan before launch because it realized it had to compete directly with the Wii's price instead of just being compared next to the 360.  And a $499 sitting next to a $249 is bad enough for business, but getting rid of that would leave it as $599 compared to a $249.  Most casual shoppers won't even bother looking any further than that.

I think it is safe to say that fror the most part "only" hardcore gamers are buying 360's and PS3's right now...the casual gamers are buying Wii's like kid's buying Candy.I don't think casual gamers even look at 360's or PS3's right now.Hell all of the real good 360 games are "M"rated not real great for casual of family gaming.i would like to see a sales chart on the "core"360 since the Wii launched.Not being a Nintendo hater but the "Hardcore Gamers" should really be owning or wanting to own both the 360 and PS3.

First of all, you need to use the spacebar so people can tell where your sentences end and begin. You made a lot of great points but it was a pain to read =) (I'll be responding to the highlighted portions in order)

I'd like to think Sony was getting rid of the 20GB because of some noble reason, but the fact is this is a bad move if they did it to cut costs. I argued all the time that the 20GB PS3 is a far better deal than the 360 at $100 more. Live costs on 360, blu-ray, few gigs extra space, ability to run linux and use as a full PC with wireless bluetooth keyboards/mice/webcams. Sure, I still think the 60GB is a better deal but, but 40gigs, wireless internet, and card reads are about equal to $100 anyway so if you wanted to upgrade you could. Now, I went with the Premium because #1 it was selling more on ebay (obviously I kept one) and #2 I figured I'd go ahead and get the wireless installed and have the hard drive in for me so I could upgrade leter on down the line. The card readers were a nice touch, and the glossy finish, heh. Anyway, I think the 20GB was a great deal, obviously too good because they lost more money on it. Maybe retailers and Sony wanted to make more money with the 60GBs. Oh well.

Now, I think the #1 reason to get rid of this line is to do what you say above, and that is to cut the price of the 60GB model that people largely preferred, and also not have to cut the price of the 20GB and lose even more money. I really hope they do that soon seeing as how they could use the boost. I was looking forward to the $400 20GB version, though. Oh well.

I completely agree that M$ nickels and dimes, and people call it "choice." Well, yeah, it;s your choice if you don't want a hard drive that allows you to play backwards compatible games, online, save games without a memory card, but people generally chose the 20GB 360. Then, you can chose not to play online but $50 is quite a price for what most companies let you do for free. There are more choices but the choices aren't very good imo. Now, if I was buying a 360 I think the Elite is the best choice because I don't think 20GB is a lot and they won't let people upgrade without paying about 3 times what they should be paying ($180 instead of $60). Wireless would have been a good inclusion in the "Elite" as well, but adding HDMI was admitting fault enough I guess. Afterall, they criticized Sony for including HDMI. Whatever. Including Wireless at least would have made it a deal for consumers instead of $80 for a $10 cable and 100GB for $70. That's not a good pricing option alone, but they almost force people into it with their lack of decent upgrade options.

I disagree that HD is important for getting potential out of the systems. I've seen the games in 1080p and SD and although the 1080p looks better (especially for playstation network that has a completely different look), I can still see the detail of the graphics with a SD TV. The graphics still look better. Just because you can't see all the details doesn't mean that the beautiful graphics go away by playing on a SD TV. It's still there, and it looks great. I'll be fine for a few years. The games look significantly better than previous gen and Wii.