Yes, but the PSP was a strong handheld the time it came out, too.  Even so, Sony didn't sacrifice power when it came to the Vita. I doubt they will with the PS4, either.

@ OP

I hope they use some hybrid of the Cell so that BC for the PS3 is an option.  However, if they go with already existing CPUs to save cost, they had better put in PS1 BC (pretty obvious they will have this) and PS2 BC (not so obvious.)  I really don't want 3 Playstation consoles hogging up space in my entertainment stand.  I also expect at least 4GB of RAM, VRAM included. And I'm guessing it will launch with at least a 320GB HDD in it, but most likely a 500GB one. They will definitely be sticking with Blu-ray.  So, it will most likely be a 8x or 12x drive, which will be awesome for load time reduction.

AS for cost, I expect the PS4 will be launching for $400-$450.  They will probably be breaking even or taking a small loss.  This will also make it ~$50-150 more than the Wii U (I expect the Wii U to sell for $300-$350) for a much more powerful system.

Good topic!

I like these specs and price :)

And if those are true, I suspect they'll also be a core model at $299 with 10-16GBs of flash memory since a 8x-12x Blu-Ray drive would mean no more mandatory installs.

Way too expensive. Sony lost a huge chunk of the market with the PS3 launch and now they need to reclaim it. Sony should not price it over 350$.

How is Sony going to pay for this upgrade in technology, new plant equipment, etc., when it is bleeding red ink? There's not going to be a PS4 for quite some time. If they made game systems upgradable then we could swap the parts and pay a profitable price for the fun of tinkering with the PS3. Besides, the PS3 graphics are so good I don't think they are fully utilized now. If they are, I can't image upgrading for just higher resolution. And what new features would there be? I just don't see any compelling reason to have a PS4.

10-16 gb is too low these days but it is always possible. DLC model and bigger and better downloadble games trend will continue. They should atleast do 120gb. I am sure the cost is negligible. 

They would have learned nothing from the PS3 if they release a 500 Euro PS4 at just break-even

Ideal would be a console that costs under $300 to make, and they could have a $350 and a $400 model at launch. Then after about a year drop it to $299 and make the more expensive one even better but keep it at $399.

Lol.. Just lol. Where do you people get these completely dumb ideas from?

A (technology) company that wants to stay in business has to sell its products at following margins when entering the market:

If you gadget is a high-end product selling in small quantities: 400-500% of manufacturing costs.

If your gadget is a moderately selling product: 250-300% of manufacturing costs.

If you gadget is a general product: 150-200% of manufacturing costs.

Anybody thinking that Sony will start manufacturing a product with $100 CPU and $100 GPU is seriously deluded. Whatever Sony is planning to build (possibly by mid 2013), they will have to wait until manufacturing costs have come down, way below what is suggested here. TSMC is not ready yet with 28nm, GF is struggling even with 32nm yields, and other fabs are wild guesses.

Of course it is for the hardcore gamer who downloads dlc, demo's, etc, but the core PS4 model would attempt to capture the more casual/budget market the way the 360's arcade and 4GB models did this gen.

I imagine they would either sell their own HDD like Microsoft did, or they could allow buyers to upgrade with their own HDD like with the PS3. I'd probably bet on the first.