Despite the continued denials by Sony, our sources are now insisting that contracts have been signed with Foxconn and Pegatron to start producing the new slim PlayStation 3 model for Sony. From what we are hearing Foxconn and Pegatron are expected to start shipping these new units to Sony in late July.

The move to the slim PlayStation 3 model is likely a move to reduce the actual cost of the unit by both some chip die shrinks as well as additional integration improvements. Sony will also likely take advantage of lower priced Blu-ray drives which have come down in price since the last evolution of the platform. While our sources have not given us a number on what the actual savings might be for Sony, it is expected that the savings could be as much as 15% to 30% over the current revision of the console.

Heading into the holiday season, Sony needs to increase the installed user base as this has become critical to the survival of the platform. Many publishers and software developers have begged Sony to lower the price of the unit in an effort to increase the installed user base. Getting the PS3 console into the hands of more users is necessary, as publishers and developers complain that it is difficult for them to make any money developing software on a platform which such a low installed user base.

While Sony is expected to start taking delivery of the new units in their warehouses worldwide in late July, it still might be some time before the actual release of the new slim PS3 is officially announced. It is anticipated that Sony will continue to keep a tight lid on the existence of this new slim PS3 unit, as they need to clear older inventory off of dealer shelves prior to the release of any new unit.

The big mystery really is what kind of pricing Sony will set for the new slim PS3 model. Our sources tell us that the release of the slim PS3 is likely to come with a price reduction that will be countered by Microsoft with the expected move of dropping the Xbox 360 Elite package to $299, while at the same time discontinuing the current Pro model unit as we told you about earlier in the week. It is expected that Sony knows and wants to be at a $299 price point, but even with the expected cost savings of the slim PS3, that could be a difficult number for them to hit; a move to $349 could be more likely, but nothing has been decided yet on the pricing, from what we are hearing.