You've got me wondering - Perhaps Sony is planning a future CELL-enabled revision of the PSX hardware that contains a large HDD.
No, SCEI probably has to do this to sell PSX3 without taking a loss.
What people are missing is the deteriorating financial health of SCEI; SCEI's barely breaking even from PSX2 business and has depleted its cash reserve on CELL, and this is why SCEI is resorting to issuing bonds to continue CELL research and fab investment.
When asked why PSP would launch at 250 pounds in UK, Chris Deering replied that SCEI needs to make profit on hardware itself; this is definitely a change of tone from the old SCEI that were not afraid to take $150 per unit losses on first batch of PSX2 units.
XBox Next is stripped to bare to be cheap, yet it will launch at $299. PSX3, loaded with expensive custom processors and non-standard memory, costs much more to build than XBox Next. What's SCEI got to do to justify PSX3's higher price?? Make it "All in One Wonder" box to justify its sticker shock. Kutaragi figures there are a couple million loyal early adapters who don't mind paying a rip-off price to get their hands on the first bach of PSX3s, so why not play these players to milk the last drop of yen/dollars out of their wallet???