Sony may decide to cut the suggested retail price of its Playstation 3 console to a rather more palatable £199.99 which, some suggest, could ignite a price war amongst retailers just in time for Christmas.

Many expect an announcement to be made by Sony at the Gamescom conference in Germany in August, and MCV reports that some retailers would be ready to slice 10 per cent off the PS3's SRP, bringing it to around £180.

Nintendo was the last manufacturer to slash prices bringing the price of the Wii gaming console to £99, with some like Tesco offering discount codes that allow customers to cut the cost even further; the move also coincides with the release of the new Nintendo Wii U console.

Microsoft, the report adds, may either drop the price of its 250GB Xbox 360 console even further or slash the cost of bundles in a bid to promote its popular motion controller, the Kinect; the first option would almost certainly signal the demise of the 4GB Xbox 360 console.

A smaller and newer version of the PS3 has been launched in Japan and could soon be released in Europe. It is very likely that this model will be both cheaper to produce and less prone to failure which would, in turn, allow Sony to improve its margins on every console sold.