Sony Slashes PlayStation 2 Price

Sony Computer Entertainment America cut the North American price of its PlayStation 2 video game console by one-third Tuesday in a move to boost sales and increase its lead over rivals Nintendo and Microsoft.

Effective immediately, the PlayStation 2 will cost $199 in North America, down from $299. PlayStation One will cost $49, down from $99. Prices for accessories and controllers have also been reduced, Sony Computer Entertainment America, of Foster City, California, says in a statement.

The price cut trumps Microsoft's rumored plans to bring down the price of its Xbox next week at the start of the Electronic Entertainment Expo in Los Angeles. Analysts still expect Microsoft to cut the Xbox price to the $199 level. Microsoft's Xbox now retails for about $300 in the United States, while Nintendo's GameCube costs around $200.

"I expect Microsoft to come down in price as well. There will be price parity with the PlayStation," says Paul O'Donovan, senior analyst with Dataquest, a unit of Gartner. "It is starting to become a bit of a price war."

Let the Games Begin

Sony, the leader in the worldwide game-console market, puts the PlayStation 2 within reach of a new audience with the price drop, and demonstrates that it doesn't fear Microsoft, says O'Donovan.

"Sony is saying that it is not going to be priced out by Xbox," he says. "It is a combination of market-share protection and increasing market presence. The players are trying to gather the next phase of consumers. Now you get the people who make the $200 price mark their limit," he says.

Since the PlayStation 2 and the Xbox both double as DVD players, there is competition in that market as well. Nintendo's GameCube, however, does not offer DVD capabilities. That console, according to O'Donovan, is targeted at a different market: children instead of older teenagers and young adults.

The price cuts in the United States follow cuts in Europe and Australia. Microsoft last month slashed the price of the Xbox in those regions by as much as 38.5 percent. Nintendo responded by lowering the European price of its GameCube by 20 percent.