Read This Before Buying a New Gaming System


If you're in the market for a new Sony PS3, consider yourself $50 richer.

Sony (SNE) revealed yesterday that it is slashing prices on its video game console. The entry-level model with a 160-gigabyte hard drive is going from $299 to $249. The higher-end unit with double the storage capacity is also being marked down by $50, to $299. The new price points are effective now in the United States, kicking in Thursday in Japan.

Remember when the PS3 hit the market five years ago? The 60-gigabyte model set diehard gamers back a whopping $599. Given the limited supply at the time, desperate holiday shoppers found themselves paying even more to secure a PS3 through eBay (EBAY) and other resale channels.

Don't let that be you.

There are five video game consoles and handheld systems that will vie for your hard-earned money when the holiday shopping seasons kicks up in a few months. Let's go over the three that you can buy now -- and the two you should hold off on.

Sony PS3

We may as well start with Sony's freshly discounted console. Beyond a handful of games that are exclusive to the PS3, the biggest differentiator between Sony's system and Microsoft's (MSFT) Xbox 360 or Nintendo's (NTDOY.PK) Wii is that the PS3 also doubles as a Blu-ray player.

Watching richly detailed movies on optical discs may seem old-fashioned compared to the growing popularity of streaming celluloid, but the PS3 also packs some sweet specs for those who appreciate stunning graphics in their game play.

The PS3 hasn't been selling as well as the Xbox 360 or Wii lately. High prices and Sony's embarrassing springtime hacking scandal haven't helped. However, Sony has gone to great lengths to beef up its security and compensate those who were victimized. The $50 price cut is just the cherry on top.

Verdict: Buy.

Xbox 360

Microsoft's boxy console has been the niche's biggest seller lately. The surprising popularity of its Kinect motion sensor has helped get gamers off the couch, while its Xbox Live is the gold standard in gaming networks.

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The Xbox comes in two basic configurations. The entry-level model is $199, but comes with an easily consumed four-gig hard drive. The beefier $299 version comes with a potent 250 gigabytes of storage capacity. Kinect will set buyers back $149 as a stand-alone purchase, but it's available bundled with new systems for just $100 more.

There's a possibility that Microsoft will respond to Sony's price cut, but it may not seem necessary for the console leader. If Mr. Softy does match Sony's haircut it will happen in the coming weeks, and well before the holiday shopping seasons kicks up in November.

Verdict: Buy -- but hold off if you can for a month or two to see if Microsoft does respond with a price cut of its own.

Nintendo Wii

Despite its whimsical name and mold-breaking motion-based controller, Nintendo has been struggling financially over the past several quarters. Strong proprietary characters including Super Mario, Zelda, and Donkey Kong just aren't the major draws they were a couple of years ago.

Nintendo cut the price of its Wii to $149 in May -- well below its original $249 sticker -- but that may not be enough. Nintendo has already announced that it will introduce a new console next year. The Wii is now a "dead console walking" to gamers. Value shoppers gravitating to the Wii this year as the cheapest of the three systems need to know that the console will likely be obsolete by the time next year's holiday season comes around. If Nintendo does keep it afloat, it will probably be at a price point closer to $99.

Verdict: Don't buy.

Nintendo 3DS

Even though Nintendo's 3-D portable system hit the market in March at $249, it experienced a desperate $80 haircut last week.

Life is hard for handheld systems. Their games are simpler than richer console experiences, and the success of Apple's (AAPL) iPod touch with its accessible App Store ecosystem makes it less necessary to carry an additional gaming gadget around.

The 3DS isn't a runaway winner, but it's also not a dud. Its ability to generate layered visuals without 3-D glasses and stream videos is a material improvement over its earlier DS incarnations. Nintendo also is unlikely to go below its new $169 price for some time.

Verdict: Buy -- but only if an iPod touch isn't the smarter choice given your gadgetry needs.

Sony Vita

Nintendo's surprisingly steep price cut must've created panic in Sony's boardroom. The Vita -- Sony's new handheld -- was set to hit the market in a few weeks at the $249 price point that Nintendo is now abandoning. It's just not happening now.

It's not a coincidence that Sony revealed that it was delaying the Vita's release after Nintendo's swift move. The Vita will still hit Sony's home market of Japan later this year, but a stateside release has now been bumped to early 2012.

No matter how tempting it may be for early adopters, you don't want to pay a king's ransom to get a Vita from Japan this holiday season. You probably won't even want to pay the more reasonable $249 for it next year, either. Sony will inevitably have to tackle Nintendo's price cut, regardless of when the Vita washes up on our shore.

Verdict: Don't buy.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft, Apple, and Nintendo.

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