If their sales are so horrible. Why cant you find a 20gb unit?

I'm guessing some people buy the 20gb only if the 60gb isn't available. Unlikely at this time, as availability is fairly common. Others probably buy the 20gb unit as a gift for someone who wants a PS3, the purchasers themselves not knowing the difference in capacity and capability. Regardless, stores know that those who want a PS3 are looking for the 60gb unit. Why stock what people don't want? If/when I end up buying one, and it will probably be a few years before the price comes down to where I would, it will need to have to have more disk capacity than 20gb. I'd probably dual boot the console with Linux for a few 'alternative' applications, despite the fact that I already run it on my PC. I'd NFS mount a share from my desktop, which would be very useable under Linux if the wired network adapter is gigabit, but I'd still want at least 50gb free for the original PS3 software. The lower capacity unit would basically be worthless to me.

Well ... when the production estimates were done earlier this year it was estimated that the 20GB model had a greater per-unit loss for Sony than the 60GB model. http://www.isuppli.com/news/default.asp?id=6919 Now, I'm reasonably sure that Sony wouldn't discontinue the 20GB model because they want to be able to advertize the lower price; they may be keeping supply limited because of their losses or it could be a system with low demand.

From Sony's perspective it's a win-win (kinda). The $500 model makes Sony lose about $70-$80 more per unit due to the $100 price drop, despite no significant decrease in price to make (HDs cost a bit to make, but increasing the storage capacity is very cheap to do). Therefore, if Sony can make more money by focusing on the $600 model, expecially if demand is primarily on the 60gb model, then they are golden. IMO, after hearing about the 2 models at E3 last year, I was very suspicious. I think Sony did the $500 model as a knee-jerk reaction to the reception of the Core 360 (which as far as I know has done well). There's a big difference between the $500/$600 PS3 as opposed to the $300/$400 360. On the PS3, you get the smaller HD which is fine, but it doesnt have HDMI or the mem card reader. At any rate, its a win for Sony.

The 20GB PS3 was a steal compared to the premium model. Especially if you don't need Wifi, for the price difference you could upgrade the hard-drive to well beyond 60GB if that interests you. I can see why Sony would release it to begin with: to establish the myth (that will live on in existing marketing material, among fanboys, etc.) that the PS3 isn't $200/$300 USD more expensive than the 360. I can also see why they'd kill it: they lose far more money on it.

Yup. We all saw it coming. It's just better for Sony and the consumer to go for the 60 GB. And isn't the card reader pretty important? Or at least do you think it will be? I guess flash drives work just as well.