Sony cut the price of the PlayStation 3 by $100 (£50) in the US on Monday, a move designed to boost the game console's lacklustre sales.
The PlayStation 3, which includes a 60GB hard drive and a Blu-ray high-definition DVD player, will now cost $500 (£250) in the US -- or $20 more than the most expensive version of Microsoft's Xbox 360. The price drop is for North America only, but a similar announcement from Sony Computer Entertainment Europe is expected on Thursday, according to CNET.co.uk's sister site GameSpot.
The PS3 still costs twice that of Nintendo's Wii console, whose $250 (£125, or £180 in the UK) price and motion-sensing controller have made it a bestseller despite its lack of cutting-edge graphics and a hard drive.
The price drop was widely anticipated by industry watchers despite Sony president Ryoji Chubachi telling Reuters last week that the company had no immediate plans for one.
"Our initial expectation is that sales should double at a minimum," Jack Tretton, chief executive of Sony Computer Entertainment America, said in an interview. "We've gotten our production issues behind us on the PlayStation 3, reaching a position to pass on the savings to consumers, and our attitude is the sooner the better."
Wedbush Morgan analyst Michael Pachter said Sony's price reduction would not double sales but may boost them by 50 per cent to about 120,000 units a month.
"The greater significance is that Sony is signalling to the market that [it is] coming down the cost curve pretty fast in making this thing. It's a pretty consumer-friendly move," Pachter said.
Sony's move comes two days before the start of the videogame industry's annual E3 trade show in Santa Monica, California, where some expect Microsoft to respond with its first price cuts on the Xbox 360.
Nintendo, whose Wii is selling so well that it is still hard to find in shops eight months after its launch, is not expected to budge on pricing.
The Xbox 360 and Wii have outsold the PS3 by several times in the crucial US market, leaving Sony, whose PlayStation 2 dominated the last console generation, in the unfamiliar position of playing catch-up.
Sony is counting on the price cut to help it significantly increase sales of the PS3 ahead of the crucial Christmas shopping season that accounts for most of the annual sales of highly profitable gaming software.
Sony is also introducing a new version of the PS3, featuring an 80GB hard drive and a copy of MotorStorm, an off-road racing game that has already sold a million copies.
The new model will sell for $600 (£300) and is aimed at gamers who expect to download a significant number of games and other content from Sony's burgeoning online network.
Sony also hopes the PS3 will win some converts following Microsoft's admission last week that the failure rate of its Xbox 360 console had been unacceptably high, forcing it to accept $1bn in repair costs.
Story Copyright © 2007 Reuters Limited. All rights reserved.
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