Sony to release $399 PS3 (40GB) this holiday

According to Ars Technica, an insider source has confirmed that Sony will drop the price of the 80 GB PS3 from $599 to $499 this holiday as expected. Additionally, the company will launch a new 40GB PS3 model for $399 complete with a Spider Man 3 movie bundle.

The report claims that Sony will make official the rumor at this year's Tokyo Game Show later this month in addition to dropping the price of the PS2 to $99.

Sony declined comment when contacted by GamePro.

Sony originally offered a 20GB PS3 for $499 alongside the former 60GB model. The company has since discontinued both models in favor of the current 80GB model which excludes full compatibility with PS1 and PS2 games, a move that is believed to save Sony an estimated $40 on every unit sold.