It's Raining PS3s!

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This has been a good month for gamers thinking about buying a new system. Nintendo (OTC: NTDOY.PK) shaved $80 off its fledgling 3DS handheld last week. Now it's Sony's (NYS: SNE) turn to crank up the chainsaw.

Sony will be giving its PS3 consoles a $50 haircut tomorrow. The new prices will be $249 for the basic 160-gigabyte system and $299 for the upgraded model with twice the hard drive storage capacity.

Will Microsoft's (NAS: MSFT) Xbox 360 now be forced into a similar cut ahead of the juicy holiday shopping season? Probably not. Mr. Softy's on top of the world right now, as the success of its Kinect motion-based sensor and the vibrancy of its Xbox Live gaming network make it less necessary to match Sony on the way down.

Don't even think about Nintendo following Sony with the Wii. It already shaved $50 off its initially revolutionary console three months ago. It won't budge from $149 until the new Nintendo console hits the market next year.

The rub of these price cuts is that they haven't really turned the industry around. Sales have been sluggish for more than two years. The latest generation of consoles may have seen their prices cut roughly in half since being introduced, but video games are still too expensive.

Gamers -- at least the casual ones -- are also too easily distracted. Free or nearly free app downloads on smartphones, video streaming, and social networking have eaten into gaming time for all but die-hard gamers.

The industry is responding. Nintendo's 3DS was pitched on the promise that it would stream Netflix (NAS: NFLX) offerings. The now delayed Sony Vita will have free access to Facebook, Twitter, and Skype. 

PS3's price cut still matters. Since it's the only console with Blu-ray playback, $249 might be appealing even to non-gamers. This isn't what Sony is aiming for. It needs owners to buy software titles, since that's where the chunky profit margins like to party.

Then again, in these crazy times when hardware prices continue to rain down, do we really expect lucidity out of the desperate system makers? I sure don't.  

Will price cuts change the way you approach your next console or handheld purchase? Share your thoughts in the comments box below.

At the time this article was published The Motley Fool owns shares of Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft, Netflix, and Nintendo. Motley Fool newsletter services have recommended buying puts in Netflix. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Longtime Fool contributor Rick Munarriz is a fan of Nintendo, Sony, and Microsoft, and has most generations of the consoles and handhelds around. He does not own shares in any of the stocks in this story, except for Netflix. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Fool has a disclosure policy.

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