Sony announced today that it was cutting the price of its struggling PlayStatation 3, in a bid to seize the initiative from Microsoft and Nintendo in the run-up to Christmas.

The technology giant bowed to consumer pressure by slashing the price of the console's basic package from £425 to £349, to try to boost its flagging sales.

In a statement, Sony said that it would also release a new model of the console with 40GB of memory, as opposed to the standard 60GB, for £299. Both will be available from October 10.

Ray Maguire, head of PlayStation UK, said the release of the pared-down 40GB model, which will have no backwards compatibility, was a "strategic decision". The new version will have two USB 2.0 ports, rather than the normal four.

"It is satisfying to be able to offer UK consumers the choice of two PlayStation 3 packages both now representing remarkable value,” Mr Maguire said.

“We have a brand new 40GB machine that represents an excellent entry point into the world of High Definition games and movies, and we have the fully featured 60GB machine being offered with two next generation gaming experiences at a highly competitive price.”

The Playstation 3 has only sold around half as many units worldwide as the Wii and the Xbox 360, the sales of each of which have broken the 10 million barrier.

In August the firm unveiled a new widget to allow PlayStation 3 to receive and record high-definition TV programmes, in a bid to show that the device could do more than play video games.

The PlayTV add-on is also be able to transfer recorded TV content to a PSP, Sony’s handheld games console, the sales of which are also lagging behind its main rival, Nintendo’s DS.

Add-on devices for the PSP have also been released, to transform the handheld console into a satellite navigation system.

The price cut means that the PlayStation 3 is the same price as an Xbox 360 Elite, which comes with a massive 120GB hard drive.

The Wii costs only £179, but does not support high definition graphics and cannot act as a DVD player.

David Reeves, President of Sony Computer Entertainment Europe, said: "The introduction of the new PS3 has been the result of extensive research into the entertainment needs and preferences of the next generation of PS3 owners.

"It has allowed us to deliver an extremely advanced, yet highly affordable High Definition entertainment system, configured to the needs of the next generation of European PS3 owners.

“PS3 has always been the device of choice for the discerning gamer and entertainment seeker, and the new PS3 is more than ever the perfect High Definition entertainment system.”

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