Release after the jump.

Sony Computer Entertainment America Announces New 40GB Playstation(R)3 (PS3(TM)) Configuration and Price Reduction Of Current 80GB Model

New 40GB Model to be Available in North America on November 2nd for $399; Effective Immediately, 80GB PS3 to be Priced at $499

FOSTER CITY, Calif., Oct. 18 /PRNewswire-FirstCall/ — Sony Computer Entertainment America Inc. (SCEA) today announced plans to introduce a new 40GB model of its PLAYSTATION(R)3 (PS3(TM)) computer entertainment system. Beginning November 2nd, to further enhance the HD entertainment experience,
the new 40GB PS3 model will come bundled with the blockbuster movie Spider-Man(TM) 3 Blu-ray Disc(TM) (BD) from Sony Pictures Home Entertainment, and will be available in North America for a suggested retail price of $399 (USD/CND). The company also announced that effective immediately, the current
80GB PS3 model will be available in North America for $499 (USD/CND), $100 below the original launch price.

"We're pleased to offer the consumer a lower price point without sacrificing the core technology components that make PS3 the most advanced high-definition entertainment system available. Every PS3 comes with a Blu-ray drive, HDMI output, an integrated Wi-Fi connection, Cell Broadband
Engine and a built-in hard-drive," said Jack Tretton, President and CEO, SCEA. "This holiday season we'll be able to offer attractive retail pricing with a broad portfolio of outstanding games including Ratchet & Clank(R) Future: Tools of Destruction(TM), THE EYE OF JUDGMENT(TM), Uncharted: Drake's Fortune(TM), Heavenly Sword(TM), Call of Duty(R) 4: Modern Warfare, Assassin's Creed(TM), Haze(TM) and RockBand(TM)."

The new 40GB PS3 will no longer play PlayStation(R)2 titles, reflecting the availability of a more extensive line-up of PS3 specific titles. Consumers looking for backwards compatibility can take advantage of the limited PlayStation 2 backwards compatibility of the 80GB PS3.

PLAYSTATION(R)3 40GB Specification

Product name PLAYSTATION(R)3
CPU Cell Broadband Engine(TM) (Cell/B.E.)
GPU RSX(TM)
Sound Dolby 5.1ch, DTS 5.1ch , LPCM 7.1ch, AAC, others *1 *2
Memory 256MB XDR Main RAM, 256MB GDDR3 VRAM
HDD 2.5" Serial ATA 40GB
I/O USB 2.0 x2
Communication Ethernet X1 (10BASE-T, 100BASE-TX, 1000BASE-T)
IEEE 802.11 b/g Included
Bluetooth 2.0 Included (EDR)
Wireless controller (Bluetooth) Included
AV Output
Screen size 480i, 480p, 720p, 1080i, 1080p
HDMI OUT x1 *3
AV MULTI OUT x1
DIGITAL OUT x1 (OPTICAL)
BD/DVD/CD Maximum Read Speed BD 2x (BD-ROM)
Drive DVD 8x (DVD-ROM) (Read Only)
CD 24x (CD-ROM)
Dimensions Approximately 12.75in(W) x 3.86in (H) x 10.8in (D)
Weight Approximately 11 lbs

*1 A device compatible with Linear PCM 7.1 Ch. is required to output 7.1 Ch. audio, supported by Dolby TrueHD or a similar format, from the HDMI OUT connector.
*2 This system does not support output from the DTS-HD 7.1 Ch. DTS-HD 7.1 Ch. audio is output from a 5.1 or lower channel.
*3 "Deep Color" and "x.v.Color (xvYCC)" defined by HDMI ver1.3a are supported.

We're choosing to focus on the PlayStation 2 consumer with the PlayStation 2, which remains incredibly relevant, and focus on the PlayStation 3 consumer with the new 40-gigabyte model and the great software coming out... Backward compatibility is a nice secondary consideration, but it's far from the number-one priority.

The father of the Playstation officially stepped down today, ending an era that saw the launch of three consoles and Sony's entry into the gaming market.

Kutaragi announced his plans to leave the company as all but an "honorary chairman" back in April. Kazuo Hirai will be stepping into his large shows to take over day-to-day responsibilities as the head of Sony Computer Entertainment Inc.

It's doubtful we will see any substantial change in the company's operations in the weeks leading up to E3, but I'm sure this move will trigger some shifts in the way Sony does business down the line.

Father of Sony PlayStation steps down [CNN]

Roughly 80 to 100 employees of Sony Computer Entertainment of America's Foster City headquarters were laid off today, Kotaku has learned from a source who was among those asked to hand in their badge and keys before leaving the premises.

"In an effort to accurately align the company to meet the changing needs of our consumers and of our industry, Sony Computer Entertainment America has found it necessary to analyze our current business and to restructure the company as necessary to continue our standing as the market leader," SCEA spokesman Dave Karraker told Kotaku this evening, when contacted for comment. " These restructuring efforts are currently underway and do include the streamlining of our operations and other initiatives to further strengthen the business, reduce costs and increase operational efficiency. "

Karraker declined to comment on the number of employees affected.

The lay-off meetings, which came as a surprise to even middle management, started in the morning and ran throughout the day, the source said. Departments were separated into two groups, with those being laid off meeting first and those remaining behind meeting next in half-hour sessions. Those who were laid off were asked to leave their belongings at the office and either have their manager pack up their desk for them or schedule an appointment some evening to fetch their possessions. Those laid off were give a fair severance package, the source added.

The lay-offs, which were preceded by a months long hiring freeze, were prompted by SCEI's call for cut backs which in turn was spurred by the company's multi-billion dollar losses and the sky-rocketing cost of PS3 game development, upper management told those who remained at the office.

The day of across-the-board lay-offs come just month after SCEE was hit by mammoth lay-offs which hit hundreds. Brian Crecente

GDC07 PS3 Home [Kotaku]

Sony's taken the best of various community aspects and blended it into a theme called Game 3.0. Not an official trademark or anything, it's just their idea that video game equivalent of Web 2.0 and its user-created content would be Game 3.0 (goes along the three in PS3).

So how does it work?

Well, you have private and public areas. Imagine the Sims and the ability to customize your home, your body, your clothes, and your face. The 3D avatar and 3D environment actually looks pretty great, considering it's actually PS3-level graphics and not just something quickly thrown up (like Second Life). You can customize your personal apartment however you wish and invite buddies (other avatars) over to chat, play arcade games, launch multiplayer games, or just hang out.

There are loads of public spaces as well. These can be generic arcade halls where you can play pool and bowl, or game company sponsored areas where you can play demos of their latest games and chat with friends at the same time. There could even third-party non-game areas like movie theaters and clothing stores where you can watch trailers, movies, or try on the latest overpriced shirt from A&F.

Speaking of commercialization, there's going to be ads. Yes, there are 3d Banner ads and HD Video ads embedded inside "appropriate" areas in the public spaces. Fortunately for you, you can bring up a virtual PSP interface from anywhere and warp back home to the (presumably) ad-free space. But in your space, you can load your own pictures from your PS3 hard drive onto a picture frame or your own MP3s onto a jukebox.

This is definitely something we can see people sinking a lot of time into as far as socializing. It doesn't seem to have an economy in it like Second Life, as far as we saw, so all your money will be sent to Sony when you purchase arcade games, furniture, and more clothing for your avatar.

How about for the hardcore gamer? There's the "Hall of Fame", an actual hall with display cases that show the "achievements" (Sony's not calling it that) that you've unlocked by playing games. Not only can you browse what you have, you can go to a gigantic hall (imagine the Star Wars Imperial Senate) and view trophies for games you don't have. Or you can see what your buddies have and compare.

It doesn't have as much depth as Xbox 360's achievements, which has possibly 50+ achievements for each game, but it does give you a neat way to walk around a room and admire just how much time you've sank into playing video games.

Although PlayStation Home probably won't be a big enough feature to actually sell the console by itself, it may just be one of many features that Sony's adding to make it quite tempting to even non-gamers, a segment the Wii seems intent on dominating. – Jason Chen

First to summarize: We posted a rumor after Sony asked us not to and they emailed to say we were no longer welcome at any of their private GDC events and that they would no longer provide us with any information found outside of the public forums.

We posted said e-mail and the Internet imploded.

First, I have to say thank you to all of the websites, newspapers, magazines, people who were so quick to come to our defense and supported our decision to stand by our story.

Second, I want to thank Dave Karraker, head of SCEA PR, who was big enough to call me and talk the whole thing through after this exploded.

He told me his take on the story and his frustrations and I told him mine, in the end we agreed to disagree on some level, but also decided that our readers and gamers in general would be best served if Sony and Kotaku could still play nicely together.

In a nutshell: The story remains up and Sony has re-invited us to the meetings and interviews initially scheduled for the Game Developers Conference.

It's unfortunate that we, not just Kotaku and Sony, but all of us had to go through this, but it's good to see the outcome: We were doing our job and Sony was doing theirs and now we can both continue to do so. Brian Crecente

The rise and fall of the PlayStation 3 on eBay is one of the most talked about gaming stories of the year. In order to paint a broader picture, I've tracked pricing trends from preorders to Christmas Eve and surveyed retailers to determine just how hard the PS3 grey market has crashed.

In the days leading up to the PlayStation 3 launch in mid-November, people all over the country lined up with dollar signs in their eyes, hoping to cash in on what was sure to be the most sought after gift this holiday season. I talked to many people planning on financing college, cars, vacations, and countless other dream items with the fruits of their labor. A week later those hopes and dreams were crushed, as reports of plummeting eBay prices poured in. Just how fast did the PS3 grey market crash? Take a look for yourself, and feel free to click the graph for a larger version.

Within two days of the system's launch the going price dropped by over $1000. eBay prospectors across the country were stunned at the rapid depreciation of their investment. While they were still looking at $600 profit on average, it was a far cry from the windfall everyone had been expecting.

The smart thing to do in that situation would be to wait, right? Several enterprising folks I talked to during the launch festivities predicted a glut early on, and planned on holding their systems until Christmas, when demand would be at its highest. As the graph indicates, that wasn't the wisest move. Four days before Christmas PS3 auctions hit the lowest point ever, bottoming out at just $724. Figuring in sales tax, that's less than $100 profit on a 60GB system.

Clearly the way to go for the PS3 prospector was preorders. On November 16th, as the reality of the system shortages began to sink in, buyers spent an average of $2,367 to secure themselves on of the 600 or so preorders sold that day, and from the point eBay started allowing receipt-verified presales prices maintained a steady average of around $1500.

How are retail stores being affected?

With the prices dropping so low, many eBay hopefuls have been returning their purchases to the stores they procured them from. Between packing, shipping, and taxes, it's much less of a hassle just to get a refund and forget the whole thing ever happened. I decided to survey several popular retail 'superstores' to get a feel for just how big a trend grey market returns were.

Here's how this worked. I called a random selection of stores across the country from each of the four retailers listed below. I asked to speak to their electronics department first, and then called back to speak with customer service. I made sure to specify intact, boxed returns to avoid clouding data with random defective units. Interestingly enough, not one store I spoke to mentioned any defective returns. If anything the PS3 is a solid machine. Bear in mind that these are not hard numbers. I spoke to whoever was staffing the departments at the time I called, and only counted the answers applying directly to those people. While I'd like to say you could safely double the returned system numbers below, there are far too many factors involved to make it an accurate estimate.

I picked the four below for various reasons. Fry's because of its unique bundling policy, Best Buy because of its huge initial allotments, Target as a major retailer that isn't focused on electronics, and Wal-Mart because I am apparently a glutton for punishment. All four stores had people wait in line for the consoles...one of the reasons you don't see GameStop represented, another reason being that many GameStop systems went to either employees or regulars to the store tipped off by employees. "But GameStop wasn't allowed to sell to employees!" Where do you think I got mine?

Store Findings:

Fry's Electronics
Number Called: 10 - Called double what I had planned for Fry's because the first five all reported having systems in stock.
Average Returns: two per store
Systems Available? Yes

Fry's stands out from the other retailers I've surveyed in that they still insist on selling their PS3 systems in ridiculous bundle packs with eight or so games. Every single store I called reported having plenty of bundles available for purchase. On average each store had received two returns, with the Alpharetta Georgia location, a favorite of mine, reporting four. Systems at Fry's can only be returned with the full bundle intact, and are resold the same way.

Conclusion: Nothing too surprising here. When I was working at GameStop on Christmas Eve I had countless customers tell me that Fry's had PlayStation 3s just sitting there, with no one buying. The only thing harder than trying to turn a profit off of a PS3 on eBay is trying to turn a profit off an $1100 bundle filled with games no one wants to play.

Target
Number Called: five - they're a major retailer, but they weren't exactly a big launch location.
Average Returns: two
Systems Available? No, though two out of five stores did tell me I had "just missed one."
Conclusion: Target doesn't get many systems in, and when they do they generally last a day tops. One electronics rep I spoke to in Colorado told me they had gotten two returns earlier in the week, which didn't last more that 24 hours on the shelf. Low volume, relatively quick turnaround.

Best Buy
Number Called: 15 - Best Buy had the greatest launch allocations, so I gave them a bit more attention while conducting the survey.
Average Returns: Four - One customer service rep said she had seen as many as eight returned, though she worked at a midnight launch store with a much larger console allocation than the rest.
Systems Available? Not a one, at any store. Most likely a corporate sponsored lie, however, as we've been getting several reports on Best Buy holding systems until New Year's Eve.
Conclusion: A much larger allocation equals a slightly higher number of returns. This whole sitting on items for big holiday sales severely screws up survey data. As well as forcing their employees to lie, they also forced me to lie. When I mentioned I was writing a story, I was told they couldn't comment to the press. I had to tell them I was a father looking in to buying one for his son, trying to figure out if the system was reliable. If anyone asks, my son's name is Rufus, and he has a glandular disorder.

Wal-Mart
Number called: Five before I gave up out of sheer frustration
Average Returns: Inconclusive. While I did have one store tell me they'd seen a couple come back, most of them couldn't figure out how to transfer me to customer service.
Systems Available? Possibly. They might not even know what it is.
Conclusion: While I've known some very helpful and intelligent Wal-Mart employees in my time, all of them must have been off over the past two days. I got through to one customer service rep and one electronics department out of five stores, the rest of the time spent either waiting endlessly on hold or being accidentally hung up on.

While return numbers seem to be relatively low, when you figure in the transactions the employees I spoke to weren't privy to, and then multiply the number by even a fraction of the stores these retailers have scattered across the country, and things start adding up. In an ironic twist to the whole story, it seems as though your best bet for securing a PlayStation 3 console, unless you want to shell out $1100 for a bundle at Fry's, is eBay. As of this writing there are over 7,000 up for auction, looking for a good home.

The Grand Conclusion, with a Personal Note
To be completely honest, when I first secured my PS3 preorder with GameStop the first thought in my head was the massive amount of money I could make from selling it. That's how I got approval from my girlfriend to put down the $100. The TMX Elmo had just been released and was selling for ten times retail price. I figured I could triple my money, pick myself up a nice flat panel HDTV...hell, I might even have enough left over for another PS3 once the dust cleared.

What changed? Well the more I thought about the PS3, the more articles I read, and the more videos I watched, until the gamer in me basically slapped the profiteer silly. The PlayStation 3 has real potential. Lair. Motorstorm. Resistance. Soon dreams of a giant TV faded away, replaced by the gnawing anticipation I'm prone to get whenever something big is going to happen in the gaming industry. That, and I got this gig at Kotaku. If you guys ever got wind of me eBaying a PS3 I'd never hear the end of it.

As it turns out my gamer instincts and the threat of hordes of angry readers steered me clear of potential disaster. Aside from a couple brief spikes, there is no way I'd have been able to pull off the television, and I know damn well I would have waited for Christmas like so many others did, only to lose even more.

The moral of this story? There's no such creature as a sure thing. The majority of eBay prospectors walked away from this experience with that lesson burned into the back of their brains. My suggestion for the future? If you want to gamble, go to Vegas. If you want to invest, try mutual funds. Leave the video game system buying to the gamers. We'll all be happier for it.

How I collected the graph data:
To track eBay sales I used a website called Terapeak, which is of of the most trusted eBay market research tools available. I looked at data for the US eBay site each day utilizing the keyword "PlayStation 3" in the Video Games/Systems category. I set the price range for $200 through $10,000 to weed out any artificially inflated auctions as well as any bogus "PS3 Buying Guide" type offerings. Keep in mind that the statistics provided are for both the 60GB and 20GB models combined. Many sellers neglected to specify which version they were auctioning, so weeding out one from the other was nigh impossible. Counterbalancing that slightly are auctions including games and extra controllers, which are also figured into the statistics.

While certainly not a completely infallible system, I believe it led to a more accurate overview of the eBay PlayStation 3 market than simply searching for PlayStation 3 and leaving it at that.

Using the same guidelines outlined above, I poked about for a few more interesting tidbits regarding system demand. For instance, auctions ending on or before November 16th, meaning preorders, had a 96.5% success rate. In the period after the system was released the figure dropped to 73%. Hazarding a guess I would say those figures are due largely in part to unrealistic reserve price auctions.

Michael Pachter, Wedbush Morgan Securities analyst, doesn't really see Ken Kutaragi's promotion as a way to remove him from the game, but rather as a way to prepare him for heading up the entire company.

Speaking to GameDaily BIZ about the management shuffle, Wedbush Morgan Securities analyst Michael Pachter said, "I think it's prudent succession planning. Kutaragi is the visionary, and his work on PS3 was done at launch. They need to groom him to replace Stringer. The rest of the guys are competent, experienced, and loyal. I think each of the other moves made sense. In time, I think you will see Kutaragi given responsibility for other functions, like Blu-ray."

As Sony President Ryoji Chubachi explained it to the Nikkei, "Mr. Kutaragi's strength is his knowledge of technology. His position is, of course, chief executive, but this means he will especially be looking closely at the area of technological development."

I've come to realize that Sony uses the volcano school of management, heat from bad decisions and poor management builds until a key person involved in the decision-making process is pushed up and up and up and finally ejected entirely from the company.

I'm going to patent that shit, Brian's School of Volcano Management.

Kutaragi Being Groomed to Replace Stringer - Pachter [Game Daily]