Confirming Speculation, Sony Cuts PlayStation 2 Prices

As expected,

Sony Electronics

(SNE) - Get Report

cut the price of its PlayStation 2 console by $30 today to $149.

In an announcement made at the Electronic Entertainment Exposition (E3) here in Los Angeles, Sony said it cut the price in an effort to boost demand for the device. Sony noted that 90% of its sales for the original PlayStation came at prices of $149 or less.

"The potential growth for PlayStation 2 is promising," said Jack Tretton, executive vice president of Sony's U.S. computer and entertainment division.

The move follows by two weeks a similar

price cut by

Microsoft

(MSFT) - Get Report

on its rival Xbox.

Sony has trounced Microsoft to date. The consumer electronics giant has sold some 25 million PlayStation 2 consoles in the U.S. and some 70 million worldwide, compared with just 14 million worldwide for the Xbox.

But Sony officials raised eyebrows last month by forecasting the company would ship 14.1 million PlayStation 2 units this fiscal year, down from 20.1 million in its just completed fiscal year. Meanwhile, some analysts have projected that following Microsoft's price cut, Xbox sales would begin to outpace those of PlayStation 2.

Wall Street showed little reaction to Sony's announcement. In recent trading, the company's shares were up 24 cents, or 0.7%, to $35.91, while Microsoft's shares were up 2 cents, or 0.1%, to $25.95.

Meanwhile, shares of leading video game software makers were down for the session, with

Electronic Arts

(ERTS)

recently off $1.73, or 3.3%, to $50.24 and

Activision

(ATVI) - Get Report

down 54 cents, or 3.5%, to $14.90.

Theoretically, the drop in console sales would be a plus for video game software makers, since console purchases often spur game sales. But because the Sony price cut was so widely rumored, some traders speculated there was a "sell-the-news" reaction to Tuesday's announcement.