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Sony's PS3 With Blu-ray Gets Back As A Player

PlayStation 3
AP
PlayStation 3

Sonyappears to be coming up with a winning formula. Amazing what a steep price cut will do, but you can't argue with success. Howard Stringer, Sony's CEO, is on the wires saying Sony sold over 100,000 PlayStation 3 units last week, calling the results "the breakthrough we've been anticipating."

That performance more than doubles Sony's previous sales performance of about 40,000 consoles a week. Analysts attribute the surge to Sony's decision to cut the price of the 80 gig version to $500 and the roll-out of the new $400, 40 gig PlayStation 3 model.

Couple all that with word of continuing supply issues at Nintendo's Wii and Sony just might have a chance at recapturing some momentum in the console business as we head into holiday shopping. Says Stringer: "It's a little fortuitous that the Wii is running out of hardware."

So far, Nintendo has shipped 9.3 million Wii's, a figure that should balloon to 22.3 million units by the end of its fiscal year next March. Sony's sold 5 million PS3's as of last month; Microsoft : 11.6 million Xbox 360's in the two years it has been available.

Sony's price-cut news of course may also be good news for Sony's Blu-ray high def platform, since that player is built into every PS3. But remember, when retailers like Walmart and Best Buy slashed prices on the Toshiba-backed HD DVD players during a one-day sale a couple of weeks ago, Blu-ray supporters seized on the move as a "fire sale" by that platform's backers to unload inventory nobody wanted. I disagreed.

Now that Sony has cut the cost of the PS3, its move is being lauded as a brilliant strategic move to boost sales of the otherwise under-performing PS3 that hasn't met initial sales goals. I don't get it. Seems like both sides are cutting costs to spur sales. Period.

The fact is, Blu-ray is vastly outselling HD DVD simply because it is embedded in the PS3. But that's not necessarily such a vote of confidence for the platform since NPD released a study saying as many as 60% of PS3 buyers weren't even aware there was a Blu-ray player in the device.

HD DVD is still the market share leader when it comes to "standalone" next-generation players sold at retail. And the price-chasm, in HD DVD's favor, is still there. I've said it before: this will be the most important few months in the dueling formats' young history. Total market penetration remains tiny, meaning huge opportunity remains. For one side or the other.

In our very unscientific survey from last week, 63% of you said you'd delay your next generation DVD purchase because of this format war. Increased sales of the PS3 are important, for the game-player. We'll see if they matter for the DVD wars as well. But as this war drags on, it's getting clearer that the debate is something the industry won't be able to afford for very much longer.

Questions? Comments? TechCheck@cnbc.com