Microsoft director bets on 40GB PS3

In a blog post and an email to MSNBC's Level Up, Microsoft's Andre Vrignaud predicts that Sony will start selling a low-end PS3 as early as the Thanksgiving holiday.

"[I]f they don't move significant hardware this holiday, they'll basically be dead for this generation," Vrignaud said.

Vrignaud believes that a single USD 599 SKU will be untenable. He predicts that Sony will sell the announced 80GB PS3 for USD 499, but will also release a scaled-down 40GB PS3 for USD 399. The smaller system would eliminate the memory card slots and integrated WiFi as well as the backwards compatibility hardware.

Vrignaud is Xbox's director of strategy. MSNBC's N'Gai Croal, who writes Level Up, accepted Vrignaud's wager.