This. The cheap 4gb 360 is shit! I feel bad for anyone who bought it. 

Yeah, thats what I was referring to

the HDD is probably costing them <10 dollars an ps3 

So reducing it to 1 dollar going to cause an 100 dollar price drop??

Nah, I reckon a $75 drop this year for the 160Gig model. Or a $50 drop with a few features added / added back in to the base 160Gig sku, like an extra USB port or 2 an improved BD drive, and, not to be outdone by Xbox 360 built in Wireless N. All that stuff should still allow PS3 to be sold at a modest profit at $50 less than it is today.

I think it is still too late. First of all, older games don't benefit much, if at all, from faster BD drive. Games are designed for slower BD drive and reading BD faster could break the game. With older games, new BD drive would have to work just as slow as old BD drive, otherwise old games may not work properly.

Patching games so they would not require HDD isn't easy or cheap. For some games, patch would be huge and sometimes even bigger than the actual HDD install. And that patch would, of course, require HDD. That would mean that most games would never be patched for non-HDD SKU. You have to remember that even with faster BD drive, HDD is still much faster than BD. Even the fastest BD drives in the world are slower than even a slow HDD (especially seek times, where even slow HDD is over 20 times faster than fast BD).

How you gona play DC online with no HDD?

If u have to buy one later, whats the point of buying Ps3 without one?

PS3 SONY HDD would be expensive.

I dont thing M$ strategy is one to fallow.

How much would the flash memory cost compared to the HDD, how much would it cost to design and manufacture a proprietary HDD, and how much would it cost to alter the manufacturing processes?

Ok. You convinced me.

But in the next Gen, it's not a strategy to just throw away. M$ didn't lost anything for doing this., actually it just shown that consumers are willing to buy a useless console and paying for playing online.

I'm glad that Sony didn't followed that strategy. But this don't change the fact that Microsoft doesn't even needs to make money in consoles sales.

If there was a offer like this: Buy Kinect 1 year Live 1 game and earn a free Xbox Arcade. Microsoft would even be able to profit from it, most because of users that will buy 1 HDD, more years of Live and more games. I'm not saying that MS should do this, of course not, but this shows that MS is in a 10 times better position than Sony in the market.

So how/where did you get the profit margins on the video game sector for Microsoft?  How do you know they will still make money on that.  You have absolutely no clue what kind of profit is being made on Live, Kinect or Xbox when taken by themselves.  Yes, we are given numbers in regards to revenue for Live, and obviously we have clues as to revenue for Kinect and Xbox as we have sales numbers, but we are never given the profit.  Revenue does not equal profit.  For all we know, they could only be making $.25 per year per Live membership, or they could be making $10 per year, or they could be losing $.25 per year per customer.

Unless you can find exact amounts of profit per item Microsoft sells, you shouldn't act as if you know that doing a certain thing will still result in profit, because it might not.  Plus, whether or not a company can still profit if they offer a deal is irrelevant.  A company wants to make so much money per item.  If they have a sale and sell 1.5 million instead of 1 million, but make 40% less profit per item, they will actually make less money.

In the long term, MS would at least not lose much money from this. But I think that you don't understood what i'm trying to say.

" I'm not saying that MS should do this, of course not, but this shows that MS is in a 10 times better position than Sony in the market."

It's a stupid idea, but MS would barely loose money doing this. The same can't be said for Sony, giving free PS3 would kill SCE.

Kinect: AT LEAST $80 of pure profit. Probably as high as $110.

Halo Reach: $30~$45 of profit.

HDD: If it's $100 at retail, then $50~$70 for a old 5400rpm 120gb HDD.

Live: we don't know much from it, but if PSN is almost tied up in loss or gain, then MS should at least make $15 for a year subscription.

But as I said, this doesn't matter, it just shows that MS is in a good position for the next years.