Sony drops price of Playstation 3

Sony Computer Entertainment America Inc. announced Thursday it is knocking $100 off the price of its struggling PlayStation 3 console to $499, and that it would introduce a new model in November for $399.

The new model, which will come bundledwith a Spider-Man 3 Blu-ray movie disc,will feature a 40 gigabyte hard drive, which is smaller than the existing console's 80 GB, and will not be able to play PlayStation 2 games.

Sony said the removal of the backwards compatibility is because there is now a larger catalog of games available for the PS3.

The lower-priced consoles may represent a good value for consumers, given that the PS3 comes with a built-in Blu-ray DVD player. Most stand-alone players sell for more than $500.

Sony's PlayStation 3 has been lagging its competitors, Nintendo Co. Ltd's Wii and Microsoft Corp.'s Xbox 360, since it launched a year ago.

The Wii has been the best-selling console for much of 2007, although the 360 overtook it in September thanks to a bump from the hotly awaited Halo 3 title.

The PS3's fortunes, meanwhile, have gone in the opposite direction. EvenSony's previous-generation console, the PlayStation 2,has outsold it in Canada since its launch, according electronics tracking agency NPD Group Canada.

Analysts expect the lower-priced consoles to spur sales for Sony. The company could sell nearly 1.5 million more consoles by the end of the year, Michael Pachter, an analyst with Wedbush Morgan Securities in Los Angeles, told Bloomberg News.