Sony launched a slimmer version of the PlayStation 3 and has slashed the price of all console models, heating up competition with rivals Microsoft and Nintendo.

Sony introduced the PS3 Slim Tuesday at the GamesCom conference in Germany. The new model, scheduled for release in the first week of September, has the same features as the older versions, but takes up 33% less space and consumes 34% less power, according to Sony.

In launching the console, Sony also announced that the price of the two current PS3 models would be lowered by $100. Starting Tuesday, the 80 GB model was available on Amazon for the lower price of $300, and the 160 GB version for $400.

The PS3 Slim, which has a 120 GB hard drive, was available online for pre-order as of Tuesday on Amazon, Sears and Kmart. Sears and Kmart listed the release date as Sept. 1.

Speculation that Sony was preparing to cut the price of the PS 3 had been circulating for some time around the Web. Unit sales have lagged those of Microsoft's Xbox 360 and Nintendo's Wii, and analysts have said Sony would have to drop prices to jump start sales.

The new price matches the Xbox 360's, but is $50 higher than the Wii. However, the higher prices for the XBox and PS3 are reflections of those two products being more powerful systems for serious gamers. In targeting the Wii at more casual gamers, Nintendo has outsold Microsoft and Sony in terms of unit sales.

In addition to competition from other vendors, the economic downturn is a likely factor in Sony dropping prices. The company in July reported that unit sales of the PS3 fell more than 31% in the quarter ended June 30, compared to the same period a year ago. Lack of a hot, new game also drove sales downward.

Nintendo gave the same reasons in reporting that Wii sales during the same quarter fell by more than half year-to-year.

The U.S. video-game industry as a whole has suffered during the economic recession. In July, the industry reported its fifth consecutive month of declining sales, according to NPD Group. Console sales overall fell 37% in July from the same month a year ago.

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