The effect would be: Sony and MS get into a pricewar. Nintendo proceeds with its plan.

 The christmass will be better in U.S. with such an model, but i don't think they will beat the 360. The Playstation brand is not so strong in the U.S. that it will sell so much units on its own. And the software library of the 360 is better than that of the Playstation. True Blue Ray is a plus, but that plus will be more important next christmass than this, I personall think.

How come everyone is discussing the market in the US only? What about a WW impact? I see the PS3 outselling the 360 WW over christmas if these cuts are made in Japan as well as the US.

Looks like it's happening.
http://www.bitpower.it/oscom/catalog/playstation340gb-p-2168.html

that picture doesn't have a chrome trim. o_O

It has 4 USB ports according to one of the pictures there... Well, it was never certain that it would have 2 only, the only evidence for that was a test setup diagram, which just means that that specific test was done with 2 of the ports.

Nice find!!! :o)

Releasing a cheaper unit, no matter what they have to take out, is probably the best thing for Sony to do right now. They need to get consoles in the hands of consumers, and the more short term losses they take, the less they'll regret it later.

Well people seem to keep forgetting that the PS3's 20GB has been $400 in Japan pretty much since the system launched there. The 360 hasn't exactly posted Wii numbers at $399, I don't know why people think A) The PS3 will be any different and B) That MS won't respond in some fashion.

BTW Fkusumot your link shows a picture of the 20GB model. The rumored 40GB model of the PS3 is supposed to have 2 USB ports. The one pictured in your link has 4 USB ports.

EDIT: I am at work and I got busy so buy the time I finished my post, NJ5 already noticed the USB port issue.

I thik there are 2 real reasons why the PS3 hasn't been selling well in Japan overall.  Firstly, the entry level model, the 20Gb, although is only $400 (comparitively speaking) for a while now, is the really stripped down version with no Wifi as well as no card slots.  Add to this, the physical size of the PS3.  It's not really attractive to the Japanese market because it's big...compare to the size of the Wii...the smaller the better in this market.

I reckon that the new PS3 will be slightly smaller than the current units, the lack of card slots and reduction of the usb's aren't really a problem.  Thankfully the Wifi will be back, which is important.  The new 40Gb would probably replace the 20Gb on the market, and would probably have a cheaper price as well.  Maybe around $350; the 20Gb will probably be reduced to get rid of them as well to around $300.