Sony Corp. will launch a slimmer model of its PlayStation Portable handheld game player in September, in its latest attempt to ignite demand for its game hardware and compete better with Nintendo Co. Ltd.

Both Sony and Nintendo released their handheld gear, the PSP and DS, respectively, late in 2004, but sales of the PSP, which can play movies, music and games, have recently been outshined by the DS.

From a distance, this PSP might not look very different from the current model ... but when you have it in your hand, the difference becomes quite clear, Sony Computer Entertainment Chief Executive Kazuo Hirai said. It's actually 33 percent lighter than the current PSP. It's also 19 percent slimmer.

Hirai, who replaced Ken Kutaragi, known as the Father of PlayStation, as head of Sony's game division earlier this year, made the PSP announcement during a presentation at the E3 video game exposition, the industry's biggest event.

Nintendo sold 23.6 million DS units in the year ended March 2007, outpacing PSP shipments of 8.4 million.

Underlining its lead both in the console and handheld markets, Nintendo last month zipped past Sony in market value and bumped the Tokyo-based electronics conglomerate off the list of Japan's 10 most valuable companies.

A Sony spokeswoman said the slimmer PSP would retail for about $170, the same as the current PSP. Nintendo's newest DS model, the DS Lite, sells for $130.

Like Sony, Nintendo last year launched the lighter version of the DS, accelerating already white-hot demand for the handset. The DS Lite has two screens, opens like a book and allows gamers to control play with a stylus, instead of manipulating a keypad.

Nintendo executives said on Wednesday that portable sales made up 50 percent of its hardware sales in 2006, compared with just 30 percent in 2002.

PRICE CUT

On the console side of its game business, Sony this week cut the U.S. price of its PlayStation 3 by $100 after seeing the PS3 far outsold by Nintendo's Wii.

This new price went into effect on Monday. Since then sales of 60-gigabyte PS3 have doubled at top five retailers, Jack Tretton, chief executive of Sony Computer Entertainment America, said during the E3 presentation.

Microsoft Corp.'s (MSFT.O: Quote, Profile, Research) Xbox 360 and the Wii have outsold the PS3 by several times in the crucial U.S. market, leaving Sony, which has dominated the game industry over the past decade, in the unfamiliar position of playing catch up.

Its high price and scarcity of attractive titles have been cited as main reasons for the PS3' slow start.

Even after the price cut, the PS3 costs $20 more than the most expensive version of the Xbox 360, and twice that of the Wii, whose $250 price and motion-sensing controller have made it a best-seller despite its lack of life-like graphics.

In a bid to send a message that strong PS3 titles are in the pipeline, Sony showcased some 50 upcoming games at the presentation, including the latest installments of blockbuster fighting game Metal Gear Solid from Konami Corp. (9766.T: Quote, Profile, Research) and popular in-house racing title Gran Turismo.

During the presentation, it was indicated that Metal Gear Solid 4: Guns of the Patriots will not be available until early 2008, giving hard-core gamers one fewer reasons to rush to store shelves.

Following the announcement, shares in Sony were up 0.3 percent at 6,350 yen by midday on Thursday, roughly in line with the benchmark Nikkei average.

(Additional reporting by Kemp Powers)

Japan Electronics Sony