The 80 gigabyte Playstation3, bundled with MotorStorm

Having long ago run out of adjectives to describe the Playstation 3's tortoise-like sales--just 667,000 units sold in North America this year, compared to 1 million Xbox 360s and 1.73 million Wiis--we knew this day was coming. But given the impact that a Playstation 3 price cut would have on Sony's bottom line, we thought the company might have no choice but to limp along until it could cost-reduce a slew of key components--chief among them, the Cell processor, the Blu-Ray drive and the RSX graphics chip--which we figured might not happen until sometime next year. Think again. Sony Computer Entertainment America has just announced that on Thursday July 12th, it will slash the price of the 60 gigabyte PS3 by $100, from $599 to $499. In addition, the company will introduce an 80 gigabyte model, with the off-road racing game MotorStorm packed in, for $599. Here's how SCEA president and CEO Jack Tretton described the company's moves in the press release that just crossed the wires:

“As we move into the next phase of PS3, it’s important that we continue to evaluate our product line, offering consumers the technology and features that meet their growing needs for new forms of media and the way in which it is delivered,” said Jack Tretton, president and CEO of SCEA. “The introduction of the 80GB PS3, the new pricing for the current 60GB model, the availability of more than 100 new software titles this fiscal year and, finally, the expansion of services for PLAYSTATION Network, will provide even more options for users and will help bring new consumers into the PS3 fold.” 

An SCEA spokesperson attributed the cost reduction to savings that Sony has been able to realize in its Blu-Ray drive manufacturing office. We suspect that they've also removed the hardware chipset that had been responsible for the PS3's backwards compatibility with PS1 and PS2 games in North America and Japan, replacing it with the software emulation backwards compatibility solution that has been in place for European and PAL territories. Finally, recent news out of Japan indicates that SCE has done a significant parts reduction on the slimline PS2, reducing its weight from 900 grams to 600 grams, and shrinking the external power adapter from 350 grams to 250 grams. By wringing additional profits out of the still-popular PS2--SCE expects to ship 10 million PS2s by the end of its current fiscal year in March 2008--the company is again better positioned to absorb the much-needed $100 price cut.

More interesting--though deliberately and frustratingly vague--are some of the reasons behind the introduction of the 80 gigabyte model. The Sony spokesperson indicated that the 80 gigabyte PS3, already available in Korea, is necessary because of SCEA's ambitions plans for downloadable content. These plans, said the spokesperson, include not only such upcoming online-only games as Warhawk and SOCOM: Confrontation, but also an in-the-works video download service that will let PS3 owners download high-definition movies and TV shows, just as Xbox 360 owners have been able to do since November 2006. The frustration comes from the fact that while Sony will signal its intentions for the service during its E3 press conference, it won't go into any more details than that. We hear that it's because SCE Japan is still furiously beavering away at the guts of the service, and in keeping with the lips-sealed-until-it's all-shiny-and-ready-for-primetime culture of Sony's engineers that we discussed earlier this year with Playstation game software boss Phil Harrison, SCE will be, well, keeping its lips sealed until it's all shiny and ready for primetime. Bummer.

For further insights into the current state of the PS3 business, please see our Q&A with Tretton here.