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Sony has slashed the price of its struggling PlayStation 3 console in the US as the Japanese technology giant looks to up the ante against Microsoft and Nintendo in the video games market.
Sony expects to double sales of its advanced PlayStation 3 console by cutting $100
($NZ128) off the price of the machine.
At $US500, the console - which includes a 60-gigabyte hard drive and a leading edge Blu Ray DVD player - is only $20 more expensive than Microsoft's Xbox 360 in the US.
Microsoft is expected to respond to Sony's move by lowering its console pricing later this week during E3, the annual video games trade show in Santa Monica.
The latest incarnation of the Sony PlayStation has failed to match the success of its predecessors, due partly to the resurgence of Nintendo and the continued progress of Microsoft in the video games sector.
Nintendo's Wii console, which sells for $250, has proved an enormous hit with consumers who have shunned the superior graphics of the PlayStation in favour of the more interactive game-play of the Wii's motion sensor-based controllers that allow users to physically play games like tennis on the screen.
Sony has come under increasing pressure from powerful US retailers to slash the cost of the machine to stimulate demand.
The Wii has sold 2.8 million units since the two consoles were launched last November, double the 1.4 million Sony consoles that have been snapped up by consumers over the same period. Sales of the latest version of the PlayStation have held up better in Europe, particularly the UK, than in the US.
Nevertheless, Sony is set to make an announcement regarding its European PlayStation 3 pricing on Thursday, although it appears more likely to bundle extra products like games or additional controllers with the console than slash the cost of the machine from 425 pounds.
Paul Jackson, an analyst with Forrester Research, said the 17 per cent cut in the PlayStation 3 price was "unprecedented" given the console was only released a year earlier.
"It looks like the decision to price the latest PlayStation as the Mercedes of consoles has backfired," he said.
He added that Sony's decision to enact such a "huge" price cut is risky given the company is already losing money on the device.
But Mr Jackson said it was a necessary move given Sony's key objective over the next 18 months is to boost sales of the PlayStation 3 to stimulate usage of the online features built into the console.
Sony was the first hardware manufacturer to achieve the No 1 position over two consecutive generations of consoles with its first two incarnations of the PlayStation.
But the third version, billed as the most advanced console ever made, has had a troubled birth after the launch of the machine was held back six months due to a series of technical glitches related to the Blu Ray-based DVD player within the machine.
But the decision to delay the launch could pay off in the long term after Microsoft admitted last week that it has had to spend around $1bn repairing faulty Xbox 360s.
Jack Tretton, the chief executive of Sony Computer Entertainment America, said that in contrast, the PlayStation 3 has the lowest failure rate in the industry.
Sony has also revealed that it will beef up the storage on a top-end version of the PlayStation 3, offering consumers an 80-gigabyte hard drive that will allow hardcore gamers to download and store more content on the device.
The upgraded console will cost $600, the same price as the original version of the console and will include a copy of the "Motorstorm" off-road racing game that has already achieved 1 million sales.
- THE INDEPENDENT