Under Pressure, Sony Finally Slashes Price Of PlayStation 3

Hoping to turn around sales of the PlayStation 3, Sony Corp. (NYSE: SNE) has finally introduced a new, cheaper model of its gaming console. The new PS3 — priced at $299, instead of $399 — is still more expensive than the baseline models of the rival Nintendo Wii and Microsoft (NSDQ: MSFT) Xbox 360. However, Sony’s Peter Dille tells MarketWatch that the console — which features a Blu-Ray player, a 120 gigabyte hard drive, and a “streamlined form factor” — is a better value feature-wise (See photo above).

Sony had been under tremendous pressure to cut the price of its console. Sales of the PS3 had been lagging those of its competitors and the recession had only exacerbated the gap: Last quarter, the company shipped just 1.1 million PS3s, compared to 1.6 million during the same period a year ago. And in June, the CEO of Activision (NSDQ: ATVI) said his company might stop making games for the PS3 if Sony did not do something to boost sales.

However, Sony had resisted cutting the price of the PS3, in part because the company had been losing money on the sale of each console ever since its debut in 2006 due to high manufacturing costs (Overall, Sony posted its first full-year loss in 14 years in 2008). No word on the manufacturing costs of the new console, although in its announcement the company is saying that “the internal design architecture of the new PS3 system, from the main semiconductors and power supply unit to the cooling mechanism, has been completely redesigned.”