Rumors have been spreading wildly lately that Sony plans to release a 40GB PlayStation 3 console for a bargain price of USD 399. These rumors have yet to be confirmed or denied at this point, but it seems that there may in fact be some truth to them.
The latest talk is that Sony has contacted FoxConn, the Taiwanese manufacturer who currently make PlayStation 2's, about producing a cheaper PS3. This, however, has yet to be confirmed, though the new version is said to have a smaller hard drive, possibly 40GB.
To lower the price of the console, Sony is expected to drop backwards compatibility as it has done with the 80GB model, and may be reducing the number of USB ports on the console.
This new SKU would likely be released prior to Christmas and is expected to release just under USD 400, to compete more closely with Microsoft's Xbox 360.
Be sure to check back with PSU for more details as they break.