Sony on Tuesday announced that it would immediately slash the prices of its PlayStation 3 by $100 in a bid to jumpstart sagging sales of its video game console. Additionally, the company will deliver a new "extremely streamlined" version of the PlayStation 3 in September; current versions of the console are tank-like and enormous.

Sony currently sells two versions of the PlayStation 3: a version with an 80GB hard drive that now costs $299 and a 160GB version that costs $399. The new, slimmer model will pack a 120GB hard drive and will cost $299.

"By launching a vast library of exciting and attractive software titles for PlayStation 3 this holiday season and offering customers a line-up of hardware models and pricing to match their preference, Sony will build on the momentum and accelerate the expansion of the PlayStation 3 platform," a statement from the company reads. That's one way to look at it. Previous to the price drop, Sony's least expensive model was more expensive than the most expensive Xbox 360, its closest competitor. But the PlayStation 3 also lags well behind market leader Nintendo Wii, which comes in a single $250 version.

Sony has tried to position the PlayStation 3 as the premium video game console, and even with the cuts it still has the pricing to match that description. The console has generally lagged well behind its competitors, and that gap has only grown during the current economic meltdown. In July, Sony sold just 122,000 consoles compared with 203,000 Xbox 360s and 252,000 Wii consoles. Overall, Sony has sold 24 million PlayStation 3s worldwide since its launch, compared with more than 30 million Xbox 360s and 53 million Wiis.

Sony has flirted with success here and there, and the PlayStation 3 actually outsold the Xbox 360 for several months. But after Microsoft slashed the prices of its own console, PlayStation 3 sales nosedived. And the Sony division responsible for the PlayStation 3 has fared poorly during this time frame as result, posting a $420 million loss in the most recent quarter. Sony announced its first annual loss in 14 years in March and is on track for another year in the red.