May 11, 2004 1:39 PM PDT

Sony cuts PlayStation price to $150

LOS ANGELES--Sony trimmed the price of its PlayStation 2 game console Tuesday and gave a few more details on its upcoming handheld game player.

In a press conference before the E3 video game trade show, Sony announced the PS2 price would drop from $180 to $150, effective immediately. The cut was widely expected as an effort to match Microsoft's new price for its competing Xbox.

But Kaz Hirai, chief executive officer of Sony Computer Entertainment America, denied the cut was a me-too move, characterizing the decision as part of a deliberate strategy to extend the shelf life of its console. "Many of our competitors have tried to increase their position against PlayStation 2 solely based on price," he said.

Hirai also had a few more details about the PlayStation Portable, the handheld game player Sony announced at last year's E3. He confirmed that the PSP would be a multifunction device and said the company was working on partnerships with movie and music studios to format entertainment for the device. Hirai also confirmed that the PSP would work with Sony Connect, the company's new music download service.

"We see games as the killer application for this device...but we've also received interest from other major entertainment providers," Hirai said.

He did not disclose planned pricing for the device, however, and stuck to release dates announced earlier this year.

Sony also had more details on the Cell processor being jointly developed by Sony, IBM and Toshiba. The Cell is expected to power the next version of the PlayStation, and Sony announced that IBM will produce workstation PCs based on the processor. Prototype workstations are set for release in the fourth quarter and will be intended mainly for PlayStation game developers, with models optimized for animation creation and other entertainment industry tasks planned for later.

Sony's biggest challenger with the PSP will be Nintendo, which has dominated the handheld gaming market for more than a decade with its Game Boy franchise. Nintendo revealed plans Tuesday to extend the line with a new portable player, tentatively dubbed the DS.

Nintendo executives unveiled a DS prototype at their own pre-E3 press conference. The device looks like an enlarged Game Boy Advance with two screens and a few extra buttons. The screens will be capable of showing detailed 3D images and will be touch-sensitive, allowing players to control games by tapping the screen. The company also will include a built-in microphone for controlling games via voice commands.

The DS--set to arrive late this year in Japan and North America at a price to be announced--will have wireless connectivity through 802.11b networking and a proprietary short-range networking technology developed by Nintendo. The DS will play both Game Boy Advance games and titles developed specifically for the system using a new 1GB media format.

George Harrison, vice president of marketing for Nintendo of America, said the DS packs in several technologies Sony's PSP won't have and leverages the Game Boy's market dominance.

"That loyal fan base is the first of many mountains Sony has to climb," he said. "By the time the PSP gets on the ballot next spring, more than 25 million Americans will have already voted for the Game Boy Advance."

Nintendo President Saturo Iwata promised similar innovation for the company's next home console, promising Nintendo would compete on entertainment value rather than supercomputing horsepower.

"Simply beefing up the graphics won't make games different," Iwata said. "The time when horsepower alone made an important difference is over."

 

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