I still don't get how could they save much with using 40 Gb HDD. 40 Gb HDD only saves Sony about 2-3 dollars MAX and dropping a couple of USB ports and card readers cost very little. Dropping Wi-fi would save some money but I've read it'd still be in. The only way this could drop production cost more than 10-15 bucks over 80 Gb SKU is by using cheaper components in everything which would hurt reliability a lot. Hopefully they don't go that way like MS has. Well, the other way would be by doing complete redesign but it is not yet possible because it is a long and expensive process.

I agree $399 PS3 would increase sales some but people could just think it as crippled model (like Core) and not buy it. It did happen to Sony already with 20Gb model.

Also 20 Gb & 60 Gb cost more to produce that 40 & 80 Gb but actual price difference is very small. They have saved much more by dropping EE which was actually the real motivation for new 80 Gb SKU.

Picture worth a thousand words, so, here you go,

Sony pretty much denied its existence only to turn around with FCC-ed it. 

I kind of doubted the existence of this for awhile, but now I am leaning towards thinking something is actually in the pipeline along these lines.

If its financially feasible they will do it, any other post on this matter is a waste of time.

As far as I know it isn't possible to get an 80GB drive for less than a 40GB drive, but I do know for a fact that at consumer prices, a 40GB laptop drive costs less than $5 less than an 80GB laptop drive.

Sub 100GB drives vary so little in price that you really can't save a substantial amount of money by swapping one for a smaller drive. Even if they created a model without a hard drive, they'd save less than $45 (and that's assuming they pay consumer prices, which they don't).

I don't doubt that Sony is preparing a new model. But believing that they can save $100 by reducing the size of the hard drive is retarded. A memory stick reader costs $10 at consumer prices, so it's not like taking that off is going to result in a $400 model either.

 The reason the PS3 costs what it does is because of the Cell processor, Bluray drive and to a lesser extent the RSX. Adjustments to any other components will result in a minor cost reduction at best.

- dont expect anything from Sony before GT5prologue or Unchartred (december 2007) or Spring 2008. If they say anything NOW they will kill their present sales.

- If Sony make a price cut NOW
they will improve their quality/price ration but they will not change the content of the PS3. A Xbox360 price cut will counter it easly.
Even more, people will say "hey, the PS3 is cheaper now but there is still no exclusive game I want to play, let's wait another price cut and better games"
= no sales increase.

Sony need to wait for some better exclusive game with solid review (not Lair!).
Then they will have something you can only play on PS3 (like Halo3/Bioshock for the Xbox360) with a better entry price.

- the 40gb model is not only a PS3 with a 40gb HD.
It may also be a new produced sku that would cost less to produce than the previous 60gb/20gb/80gb. It is not because it only has a 40gb HD,
it is because the global PS3 cost may be reduced (not only the HD part) do to new production "methodology".

I don't know... More and more I look into this 40Gb PS3, the more I feel it will not be a good move.

Consumers are a strange crowds sometimes. Some things that they will look at will be:

1. Cheaper = great, but what's wrong with it. (Xbox 360 Core = perfect example)

2. I'm saving money but what am I sacrificing...

3. Reduced SKU = will I be able to play all the games. (Some consumers will think that because the SKU has cut off a number of extras, it will also mean it wont play everything as well - they wont bother to look into it).

4. So many SKU's it's confusing... which one is best value for money? (Not necessarily the cheapest).

Smart people will look into all these things or work out the answer for themselves but when it comes to the general consumer, which is the purchasing power in general, these people have absolutely no clue as to these things and the simplest of questions and answers will baffle them.

4 SKU's in one year is not a great idea. Xbox 360 has 3 and PS3 will have 4 and both systems are selling rather poorly. Nintendo brought out just 1 and there is no confusion for these simpleton consumers. Yes price has a major impact but so does simple choices.

Well there are rumors sony is buying a lot of 40 gig HDD's. But I have no idea why people think it will be for US or even why there should be a $399 price tag on it. If it comes, it would be very likley Japan (the territory the 20 gig is still on sale!). Why not do a 40 and a 80 gig for Japan without EE (-->lower the production price)?  And even if the 40 gig is comming to NA, why not for $499 to replace the 60 gigs. These should be sold out in end of october/begin of november?

I think Sonny will cut the price (in US) in march. By then, they will have actually content to back a price cut up! In Europe it may come before Christmas, but I wouldn't bet on it.

Sony needs to market this SKU better if it does come out. Because I don't even know if the 80 gb PS3s are out in US yet.

Because FCC is an American association which approves electronic devices for sale in the US, and testing of a new PS3 model has been done by the FCC.