Scott Steinberg, VP of Product Marketing at SCEA, has said that they underestimated demand for the 80 GB PS3. He said Sony were wrong in thinking that the price of the 80 GB was a big factor and that consumers would prefer a cheaper 40 GB. Steinberg said that we will now see Sony replenish the 80 GB in the marketplace.

BIZ: Regarding the PS3 SKU strategy, there's been some talk about the 80 GB model possibly being phased out from some of the rumblings we've heard and that Sony is looking to possibly put some more distance between the 40 GB and some new model that might come out, maybe packed in with the Dual Shock 3... but it seems like there's been so much change over the last couple years; first you had the 20 GB and the 60 GB and the 40 GB and the 80 GB. Doesn't that lead to consumer confusion to have so many different SKUs out there?

SS: It hasn't hurt Apple. Our strategy at the end of the year was to offer up a $399 40 GB, which we thought was the magic price for a Blu-ray machine and then a $499 80 GB. What we were surprised to see is that $100 really didn't matter to a certain customer. Our sales were fairly equitable according to TRST and our internal numbers through the holidays and even into January; we're pretty dry on the 80 GB as a result of us underestimating the demand for the 80 GB and thinking that most folks, because the price message was such a big part of the pundits and the analysts decrying the differences between the 360 and the PS3, [would prefer the 40 GB]. Reality is the price wasn't that big of a deal and $499 sold a lot more than we thought, so the 80 GB got dry at retail not due to us artificially compressing it but the demand became greater than we thought. So you'll see us replenish these in the marketplace. We're still committed to our current strategy and there is much to do about nothing, I think is the way to think about it.

BIZ: So the 40 GB and the 80 GB... those are the two that are going to stay on the market, and there's no plans to swap one out for another?

SS: I don't know about the long term. We're looking at the marketplace and I think if the business can support two, we'll continue to do that but what we're seeing is that the hardcore guys have gone to the 80 GB and they value that extra hundred dollar worth of features and the more casual consumer, we think has gone to the $399 because they're a little bit more price conscious. We're still talking to our retail partners, we've got a big retail meeting next week in Scottsdale and we'll continue to take our learnings from the last couple months and we're formulating our strategy on how the hardware roadmap looks for the balance of the year.