Due to the removal of various components from the PS3's innards, coupled with smaller chip size, Sony has been able to cut the production cost
of the PS3 by half since last year. Each console can now be produced at $400 a unit, rather than the $800 it was costing for each PS3 around November 2006. It's not clear whether this is the case for both the 40GB and the 80GB models, but it seems fair to assume that the 40GB is now selling at cost.
What does this mean for consumers? More wiggle room with regards to pricing. We wouldn't at all be surprised to see a drop in price sometime this year. Don't expect it to come soon though. Sony are still riding a bit of a wave with regards to PS3 sales and with a number of high profile games coming out in the next few months, that can only improve.