A Cheaper PlayStation 3 for the Holidays?

Sony is fighting to keep its gaming console and its Blu-ray DVDs competitive.

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Expectations are building that Sony will finally cut the price on its PlayStation 3 gaming rig, having announced a cheaper version in Europe and Japan. Analysts expect a similar model here in time for the holidays that would be $400, or $100 less than what's been the least expensive U.S. offering. The less expensive PlayStation would have a smaller hard drive and some missing capability, including backward compatibility with the PlayStation 2. But it would still have a Blu-ray disk drive.

That keeps the PlayStation battling on two fronts. Sony needs to keep its console relevant amid the runaway success of Nintendo's Wii and the recent bump for Microsoft's Xbox. Microsoft gained new momentum with its blockbuster Halo 3 game, which brought in $300 million in its first week last month and spiked sales of the Xbox. Players complain that Sony has failed to deliver enough games to keep PlayStation competitive, especially at a price for the console that is at least $150 higher than its competitors'.

And Sony needs PlayStation in its fight over the next generation of DVDs. Its Blu-ray format appeared to have the upper hand, partly because of the drives it sells with PlayStation, until Toshiba recently bought a market revival for its HD DVD format. Ever cheaper HD DVD players could drop below $200 before year's end.

Sony had tried to hold the line on prices for the PlayStation, which already is losing big bucks for the Japanese company. But with so many eggs in one console, Sony apparently has decided it can afford to lose more money but not market share.


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