Microsoft wasn’t the only one to slash game prices this week. Sony, in an effort to keep up with the competing console, announced a PS3 price cut—to the tune of $100.
Come this fall, Sony will knock $100 off the price of the PlayStation 3—but only the 80GB version. The new price will be $400, which is what the 40GB version currently retails for. Don’t look for a bargain there, though. The company plans to discontinue the 40GB model.
The San Jose Mercury News notes that the move shows how Sony seems gunning for Microsoft, instead of focusing on market leader Nintendo.
Earlier this week, the company announced movie and TV downloads available at the PlayStation Store. The service will feature standard- and high-definition content, with 300 full-length movies and more than 1,200 TV shows, to start. Microsoft also recently announced a Netflix partnership, as well as its own price cuts, in an effort to clear inventory on the 20GB Xbox 360.

I am sick and tired of browsing the internet to see these articles saying that the ps3 is getting a price cut and that the 40GB is being phased out. the truth is that he 80GB version is being phased out. The 40GB version is getting a hard drive upgrade. This sloppy journalism and arrogance has to stop, it causes confusion to the consumer.
THEY SHOULD JUST CUT THE PRICE OF THE 40GB PS3, To $299.99! The 80GB Its Not We Are Gonna Use The Whole Capaitcy!!
Shadow-Keeper, that was a statement given out by the company before E3 took place (as early as July 11;xbit was late, like I am).
Sony did not drop the price as many have pointed out (just basically increased hd capacity).
Tretton said the new 80 gig will have the “same functionality as the 40 gig.”
Hopefully, the confusion Sony & MS has created dies quickly and the price/value war continues.
Seems there are some others saying there will be no price drop or change at all.
http://www.xbitlabs.com/news/multimedia/display/20080718121335_Sony_Has_No_Plans_to_Cut_PlayStation_3_Pricing_Company.html
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I am sick of people who start ranting in comments before they’ve read the existing comments.