Surprise, surprise! Although last month in its speech at Tokyo Game Show 2007 Kazuo Hirai, the President of Sony Computer Entertainment, said Sony will not cut the price of its PlayStation 3 this year, it seems like he changed his mind.  

As you know Sony has sold so far only 4,3 million PS3s and they are lagging far behind its rivals, Nintendo Wii and Xbox 360.

With the Christmas shopping season coming up, Sony has to do something in order to improve the sales of its gaming platform. And they did! Yesterday Sony Computer Entertainment Europe announced a new version of PlayStation 3 will go on sale in Europe, starting October 10.

The new version has a 40 GB hard drive, two USB ports instead of four and Sony ditched also the multi-memory card port.  The new model will be priced at 399 euros and 299 GBP ($610).

The bad news is that, beside the price, Sony also slashed the backward compatibility with the PlayStation 2 games.

The official reason behind Sony’s decision to drop the backward compatibility in the 40 GB version is “the availability of a more extensive line-up of PS3 specific titles (a total of 65 titles across all genres by Christmas)". Or, in other words, “please, please buy the console and sped some money on our new games too”

In fact the backward compatibility was a controversial issue since the launch of the PlayStation 3 in Europe and it was regarded by some analysts as a one of the reasons of PlayStation3’s poor sales. As you might remember, Sony has introduced PlayStation 3 in Europe in March this year, four months after US and Japan launch. Also, at the time there were available two PlayStation 3 version (20 GB and 60 GB), but  Sony decided to sell in Europe only a modified version of the 60 GB PlayStation 3, in which the backward compatibility was achieved through software emulation instead of a hardware device.

Beside the launch of the new version, Sony announced a price drop on the standard 60GB model. The current Starter Pack, which boasted a 60GB PlayStation 3, two first-party games, and two Sixaxis controllers, will be discontinued. Sony will sell instead the new Value Pack, which includes a backwards compatible 60GB PS3, one Sixaxis wireless controller and two first-party titles. The price of the Value Pack is 349 GBP (about $712), with 76 GBP (about $155) less than the current price of 425 GBP (about $868).

Lately it seems like Europe has become the ultimate battleground in the gaming console war. Las month in an interview with Bloomberg Aaron Greenberg, Microsoft's group product manager for the Xbox game console business said Europe will become Microsoft’s “priority focus”.