Sony Computer Entertainment has reportedly cut the production cost of the materials used to manufacture its PlayStation 3 game console by 35%, the technology-research firm iSuppli Corp. informed.

Sony is battling the Nintendo Co.'s Wii and Microsoft Corp.'s Xbox 360 for market share in the videogame-console industry. The massive cut of production costs could help Sony recover from the losses recorded by selling the previous-generation PS3.

The key changes made in the production process brought the latest PS3's cost down to $448.73 from $690.23, iSuppli said. The PS3 costs about $399 in the U.S., at least $150 more than Wii and Xbox 360. Although it’s more expensive, the PS3 accounted for 16% of global videogame-unit shipments in the second quarter of 2008. Now, with the new production costs 35% lower, the company could take some big bights out of the competition’s pieces of the large pie.

The leader of the market is Nintendo Wii with 54%.

This change will most likely take Sony to the break-even point in the next year, said Andrew Rassweiler of iSuppli.

"The PS3 may be able to break even in 2009 with further hardware revisions," iSuppli said in a statement.

A key change is that the PS3 consoles use a high-end version of the Cell processor and other chips made using a 65-nanometer manufacturing process, instead of the older 90-nanometer process. This change reduces unit manufacturing costs and lowers power consumption. The number of components inside a console will be reduced.