Sony has announced that the 40GB PlayStation 3 is coming to the North American market. However, the introduction of the 40GB model has been controversial since it doesn't have the backwards compatibility of the 60GB model.
Jack Tretton, SCEA CEO, stated in an interview with the Wall Street Journal that "removing that capability, along with a few other features, isn't dramatically reducing Sony's cost of manufacturing the console but will instead encourage buyers of the entry-level PlayStation 3 to purchase more games designed specifically for the new system."
In a different interview with Newsweek, Tretton explains why the 40GB PlayStation is a better value than the 60GB. According to Tretton, the 40GB PlayStation, which lacks backwards compatibility, retails for $400. The PlayStation 2 currently retails for $129, so the total cost for both is $529, which is less than the original price of the 60GB PS3 with backwards compatibility. "I've got two machines that do everything the same machine did a year ago at $599. So it's hard for me to see that as a negative for the consumer." Tretton rationalizes.