Sony Computer Entertainment Europe finally made it official today: the PlayStation 3 console is getting a price drop in Europe and a new 40GB budget line model is planned for release.

First up is the new 40GB model, which will hit European territories on October 10 at a price point of £299. While this new model is cheaper in price than the Xbox 360 Elite, the 40GB PS3 only features two USB ports, lacks a memory card reader, and includes no backwards compatibility whatsoever with PS2 games.

The 60GB PS3 Starter Pack, which includes an additional SIXAXIS wireless controller and two first party titles will now go on sale for £349 while “while stocks last.” Does this mean the 40GB is replacing the 60GB, or will Sony pull another SKU on us?

New PLAYSTATION®3 Model to Take Holiday Season by Storm

Aggressively priced hardware and a terrific software line-up make for an unbeatable combination

New 40GB PS3 at €399

London, 5 October 2007 – Sony Computer Entertainment Europe (SCEE) today announced details of its exciting new PLAYSTATION®3 (PS3™) model that will launch throughout the SCEE territories on 10th October 2007 at the highly attractive price of €399.

Providing an incredibly appealing entry point to the world of High Definition gaming and entertainment for the holiday season, the new PS3 brings the next generation of interactive home entertainment to homes all across Europe, Middle East, Africa and Australasia.

Along with an ever expanding line-up of PS3 titles (a total of 65 titles tracking across all genres by Christmas), the new PS3 is equipped with a 40GB HDD and includes all the features central to the High Definition entertainment experience; true next generation gameplay, stunning High Definition Blu-ray Discâ„¢ movies, SIXAXISâ„¢ wireless controller, Wi-Fi and HDMI connectivity, all powered by the Cell Broadband Engineâ„¢, the digital heart of PS3.

As with the 60GB PS3, the new PS3 features upgradeable firmware allowing new features and functionality to be added to the system as time progresses. A recent firmware update, for example, enabled PS3 to upscale DVD’s played on the system to full 1080P High Definition.

The introduction of the new PS3 has been determined following user feedback from thousands of existing PS3 owners as well as research into future potential PS3 owners. The new model features two USB 2.0 ports rather than four and no longer includes the multi memory card port.

The new model is no longer backwards compatible with PlayStation®2 titles, reflecting both the reduced emphasis placed on this feature amongst later purchasers of PS3, as well as the availability of a more extensive line-up of PS3 specific titles (a total of 65 titles across all genres by Christmas).

The existing Starter Pack*, comprising a 60GB PS3 with extensive backwards compatibility, an additional SIXAXIS wireless controller and two first party titles will be reduced in price to €499. Remaining on sale while stocks last, the 60GB model represents outstanding value for the keen gamer wishing to upgrade to the High Definition capabilities of PS3.

“The introduction of the new PS3 has been the result of extensive research into the entertainment needs and preferences of the next generation of PS3 owners,” said David Reeves, President of SCEE. “It has allowed us to deliver an extremely advanced, yet incredibly affordable High Definition gaming and entertainment system, configured to the needs of the next generation of European PS3 owners. PS3 has always been the device of choice for the discerning gamer and entertainment seeker, and the new PS3 is more than ever the perfect High Definition entertainment system.

*In the UK and Ireland, the Starter Pack will be replaced by a separate in-store promotion on the 60GB PS3.

Read more: PS3 80GB Dropping To $400 In September, Will Replace 40GB, It’s Official: 40GB PS3 Confirmed For US, 80GB Gets Price Cut, Sony To Drop PS3 Price, Announce 40GB In Europe Tomorrow, 80GB PS3 Confirmed For Europe, Hits August 27, Blockbuster Cutting PS3 40GB Price September 28