Sony Corp will launch a cheaper model of its PlayStation 3 in the United States, hoping to attract more buyers as it goes up against rival game consoles from Microsoft and Nintendo this holiday.

The company also cut the price of its highest-capacity model by about 17 percent.

The new version of the PS3 will come with a 40-gigabyte hard drive, cost $400, and go on sale on November 2, said Jack Tretton, president of Sony Computer Entertainment America.

The price of the 80-gigabyte version will be cut to $500 from $600.

The 40-gigabyte model has already made its debut in Europe and Japan, and was widely expected to come to the United States ahead of the crucial year-end shopping season that accounts for the largest single chunk of annual video game software and hardware sales.

I think the educational curve is starting to be broached with the general consumer, Tretton told Reuters in an interview, when asked about his expectations for the PS3 through the end of the year.

Sales of the PS3, which has a built-in Blu-ray drive for playing high-definition DVDs, have lagged those of Microsoft Corp's Xbox 360, which comes in versions costing from $280 to $450, and Nintendo Co Ltd's Wii, which costs $250.

Sony had previously offered a 20-gigabyte model but stopped making it earlier this year and cut the price to clear out inventory after finding most customers were opting for higher-capacity versions.

For the new 40-gigabyte PS3, Sony has removed its ability to play games for the predecessor PlayStation 2, which is still selling strong despite its aging technology.

We're choosing to focus on the PlayStation 2 consumer with the PlayStation 2, which remains incredibly relevant, and focus on the PlayStation 3 consumer with the new 40-gigabyte model and the great software coming out, Tretton said.

Backward compatibility is a nice secondary consideration, but it's far from the number-one priority.

Japan Electronics Sony