Sony is introducing a new version of its PlayStation 3 console in North America in August and cutting the price of the current 60GB model by $100 from Monday, it said.
The company hasn't yet confirmed if this price reduction will be applied across its international markets.
The US price of the current console with a 60GB hard-disk drive will fall to $499 and a new version with an 80GB drive will be launched in August at $599, the same price the 60GB model has been selling at until now.
The new pricing means that the top-of-the-line PlayStation 3 will still carry the same price tag as it has since launch so while the price of the 60GB model has been cut, but not to the extent that analysts have been hoping for.
The PlayStation 3's price, the highest ever for a games console, has been criticized since before launch. It is cited by many as a reason for relatively poor sales of the console. Sony missed its shipment target for the first few months and has been struggling to keep up with Nintendo's smash-hit Wii console, which costs about half as much.
The timing of the cut comes as some surprise. On Friday Sony president Ryoji Chubachi told Reuters in an interview that Sony had no plans at present to cut the price of the console.
The 80GB version of the console was first revealed in a regulatory filing in March. The machine was officially announced by Sony in late May and first went on sale in South Korea in June.
Sony said the extra hard-disk space will appeal to online gamers and those interested in using the PlayStation 3's internet connection to download movie trailers and games. The new version will also come packaged with the "MotorStorm" game that supports up to 12 people playing online in the same game simultaneously.
Earlier on Monday before Sony announced its price cut, the head of Microsoft's Japan unit said the company has no plans to cut the price of its Xbox 360 console should Sony reduce the PlayStation 3 price.
"I think we have very competitive pricing," said Darren Huston, president of Microsoft's Japan unit at a Tokyo news conference.