Sony Drops PlayStation 3 Price as Microsoft Xbox 360 Dominance Grows

In order to combat the growing market dominance of Microsoft's Xbox 360, Sony has dramatically reduced the cost of its flagship PlayStation 3 games console.

The PS3 Price Cut

In the midst of its GamesCom presentation, Sony announced plans to cut the cost of its PlayStation 3 (PS3) games console.

The cut will see the company cut the retail price of its 160GB model from €299 to €249 and the price of its 320GB model from €349 to €299.

The new price is set to come into effect immediately in all North America and European territories, following in Japan on Aug. 18, 2011.

"[T]he new price will make the platform more accessible than ever and will appeal to a wider audience looking to buy the best entertainment system for their home," commented a Sony spokesperson on the price reduction.

"Through these price reductions, the upcoming line-up of blockbuster software titles for the PS3 system and the industry's strongest offering of entertainment services, SCE will continue to expand the PS3 platform and deliver a world of computer entertainment that is only possible on PlayStation."

Microsoft Xbox 360 Dominance

Though not mentioned by Sony, since the news broke analysts have speculated that the move may be motivated by the growing dominance of its chief competitor, the Xbox 360.

It was revealed in Aug., 2011 that for the seventh consecutive month in a row Microsoft's Xbox 360 had outsold both Sony's PlayStation 3 and Nintendo's Wii.

The news was reported in a blog post on Microsoft's U.S. blog. In it, the company boasted that the Xbox 360 had for the seventh month in a row taken the crown as America's favourite games console. The report alleged that the Xbox had sold more units in the U.S. than any other console for 13 of the past 14 months."

According to the post, despite the industry-wide slowdown in sales suffered by its competitors -- shown in both Sony and Nintendo's quarterly financial reports -- the Xbox 360 is still on track to have its best-selling year to date.

Microsoft based its claims on the findings on an independent study by the NDP Group.
The study found that having sold 277,000 units in July, the Xbox 360 currently accounts for 45 per cent of the console market. It also alleged that total "retail spending" -- games, software, accessories -- had reached the $250 million mark.

The news follows the impressive financial performance Microsoft's Entertainment & Devices division boasted in its quarterly earnings reports.

The department is the part of Microsoft that makes and develops the Xbox 360 and Xbox LIVE. In its financial statement, Microsoft reported an impressive 30 per cent growth in the department's revenue for the quarter and a massive 45 per cent increase for the year.

This was in no small part thanks to the Xbox 360 console, which managed to ship 1.7 million units, marking a 200,000 increase over Microsoft's previous quarter. This meant that the year had seen 3.4 million more Xbox 360's shipped than in 2010, with 13.7 million consoles being sold worldwide.

This compared to Sony, which has seen a downturn in the number of PS3's shipped. In its quarterly financial statement Sony reported shipping 1.8 million PS3 units. This compares to last year when in the same quarter it managed to shift 2.4 million PS3 consoles, marking a 25 per cent decrease in consoles shipped.

Analysts have since speculated that Sony's price cut may be designed to combat this trend and breath new life into its ailing console.