It seems that PS3 sales increased after the introduction of the 40 GB model. Judging from software sales, it seems that most Japanese are using it as a Blu-Ray player anyway, so...

I just had an interesting thought. What if Sony is removing BC and not worrying about the impact because they are going to take the Nintendo approach: Sell the PS1 and PS2 games individually for download and make the BC via software emulator that you can buy on the PSN...

ah, i see. remind me, what has the wii got to do with any part of my discussion again?

 He always brings the wii into every PS discussion.  He is a pathetic troll and not much we can do about it.  I've called him out about it but it hasn't stopped.  Anyway on topic: I don't need B/C in the PS3, would i like i? YES! but i don't need it.

 Because Europe is the only region in which PS3 can compete with Wii, hence while in Europe BC might not matter and PS3 can still do fine, it won't do as well in Japan

This thread was about the ceasing of the 20GB and 60GB models in Japan, it's just like AT to bring in the Wii... Can't ever say anything positive about the PS3...

is it really? i'm assuming that you were one of the people also predicting that the 40gb would do well in EU before it was released? or am i getting it the other way round?

 and once again, the wii has nothing to do with this discussion. im not comparing consoles, im putting my point across with one console. nobody knows how the market will react to the removal of bc because nobody knows exactly how many people buy their ps3's to play, *sigh*,ps2 games.

It's a safe bet that the reasons behind dropping the original hardware design were not based upon whim, but basic sales figures and cost per unit. There is virtually no potential to effect sales of PS2 games as the PS2 is still available.

BC is clearly less of an issue for people who have waited to buy a PS3 as the majority of later adopters are simply waiting for lower prices and a greater library of games, particularly PS3 versions of the franchises they bought during the last generation.

As far as cost per unit goes, and I'd like to find some thing tangible to confirm it, but the cost to manufacture the 40GB units is allegedly around $400 currently due to reduction in components and reduction in cost of components. When a console uses many custom or newly developed technologies, this is the type of price fall one would expect to see as it has always been in the past when coupled with a greater rate of production and sales.

By dropping the earlier SKUs which were more expensive to produce, not only is Sony losing less per hardware sale (key importance), but they are also saving money through streamlining production (fewer models) and distribution (again having fewer redundant models that do nothing to boost sales). New bundle/limited edition SKUs are a different situation. Key word limited, second, targeted at a specific audience (fans of the franchise being bundled).

A) Sony to Japan "OMG, we're discontinuing the 20g and 60g models. BUY NOW YOU MUST BUY NOW or you'll never get the ps3 we know you want and you'll regret it forever"...4 months later..."OMG, we have a new model YOU MUST BUY NOW" just like they did to the 60g in NA only to introduce the 80g.

B) This is a way to decrease in overall production of the ps3 without drawing attention to it.

"and make the BC via software emulator that you can buy on the PSN..."

They do that for the PS1 games but doing it for PS2 games is hard to almost impossible the PS2 graphic chip had a very high data throughput so emulating it on the PS3 CPU could be hard and the graphic cards may not flexible enough to emulate the completely different PS2 graphic card.
This is different to the XBOX which used DirectX compatible graphic cards for both consoles.
Its not impossible (I have heard about a PS2 emulation on PC don't know how well that worked) but pretty hard.