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Sony Cuts PlayStation 3 Price, Unveils Redesigned Model

Sony, hoping to regain its momentum in the video game space, will lower the price of the PlayStation 3 video game console by $100 effective immediately. The company also unveiled a redesigned model of the system, which will hit store shelves soon.

Sony PS3
Source: Sony
Sony PS3

The PS3 will drop from $399 to $299 – and, by the first week of September, the long-rumored slimmed-down PS3, a smaller, less bulky version of the existing model, will hit store shelves at the same price.

Sony has been under severe pressure from both retailers and publishing partners to lower the price of the PS3 for most of 2009. The company is currently lagging far behind Microsoft’s Xbox 360 and the Nintendo Wii in sales, a marked contrast from its dominance of the industry in the previous generation of consoles.

The redesigned PS3 will feature a 120 GB hard drive, which is larger than the one on Sony’s existing low-priced model. It is 36 percent smaller and 32 percent lighter than existing models. It also consumes 34 percent less power.

“We feel this is going to be a great way to jump start the holiday season,” says Peter Dille, Sony Computer Entertainment America's senior vice president of marketing.

Both of the existing PS3 models—one with an 80 GB hard drive and another with a 160 GB hard drive—are now $100 cheaper (putting them at $299 and $399, respectively). Dille says the company will not manufacture either model moving forward – and the redesigned PS3, with its 120 GB hard drive, will become the only unit available.

The extra hard drive capacity will let users store games, music and downloadable content from the PlayStation Network.

The new system’s existence was another poorly kept secret for Sony. Word of the new PS3 began to spread over two months ago, escalating regularly. Even today’s announcement was undercut by Sears and Kmart, which had ads on the front pages of their respective Web sites early Tuesday morning saying, “The rumors are reality” and “New Exciting PlayStation 3”.

Dille notes the company wasn’t blindsided by the leaks this time.

“It’s tough to manage three territories and keep the lid on all of the people who have access to the information,” he says. “You’d like to keep it air tight, but I think we did a pretty good job here.”

Both ads took customers to a pre-order page for the PS3 Slim, giving an Aug. 24 release date and pricing information before Sony made the news official. Sony officials say the official date is Sept. 1.

The price cut and redesigned model will likely give Sony a significant sales bump as the holiday season gets closer.

“It will get them in the horse race a little more,” says Ben Schachter, an analyst for Broadpoint.AmTech. “Price cuts always have an impact. No matter what system you’re talking about, a $50 or $100 price cut will always result in a significant spike. Do I think it will solve all of the industry’s or Sony’s problems, though. No.”

Sony’s price reduction likely won’t be the last the industry sees this holiday season. Analysts remain certain that Nintendo will lower the price of the Wii by $50 before Christmas. (Nintendo, like Sony did before today’s action, vehemently denies it plans to cut prices.)

Microsoft likely will not alter its pricing, but is expected to replace its current $299 model with a more feature packed one, including a larger hard drive and an HDMI port for crisper images.