Cheaper PS3 chip raises price cut hopes

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Hopes have been raised that Sony will cut the price of the PlayStation 3 in 2008 after IBM unveiled a smaller, cheaper and more efficient version of its PS3 Cell processor.

The new IBM Cell BE processor reportedly uses around 40% less power than the 65nm processor that features inside the current PS3, thereby reducing costs and making the console more reliable.

IBM said the new chip will not add any other performance-enhancing tweaks, but cited that the new processor will maintain "the proper operation of existing gaming software”.

The reduction in manufacturing costs could see Sony reduce the retail price of the PlayStation 3 in an attempt to make it more appealing to the mass market.

Discussing the company's options, GamesIndustry said of a possible price cut: "Doing so will likely lead to a greater PS3 install base, but Sony could well choose to exploit the increased margins for a while, seeing as its PlayStation business now appears to be enjoying a turnaround in fortunes following the PS3’s troubled birthing period."