All PS3's to be backwards compatible?

[Scott]

So you want me to believe that they took out the chips for BC to save money and are now going to do it in an emulated fashion which is more costly? Unfortunately I find that quite doubtful.

Emulation is "more costly?" In what universe? Yes, it costs money to develop a software emulator, but it's a fixed one-time cost. It adds zero manufacturing cost to each PS3 that uses it - and it this point reducing the per-unit cost is the name of the game. Sony will be producing tens of millions of PS3s. Saving a few dollars each easily justifies spending millions on emulation software development.