In fact, just six months since its market debut, Sony has cut the price of its Blu-ray player from $999 to $499, a 50 percent reduction that took traditional DVD players about two years, according to Envisioneering Group data . When DVD players launched about 10 years ago, the price tag was $1,000. A year later, it was still $800. Two years later, retail cost finally dropped to $500.

Sony's advantage is that it manufacturers its own blue laser diodes, a key part of the next-gen players.

"Sony is passing on some of the manufacturing savings to customers," said Richard Doherty, an analyst at Envisioneering Group. "The inability to manufacturer enough diodes was a headache for the PS3 last winter, but now Sony has enough to allow these half-price players."

Competitive Moves

Sony's decision to slash the price might be a response to rival Toshiba's retail rebates. Toshiba uses the competing HD DVD format in its players. The companies are engaged in a bitter battle over which standard will reign supreme in the market.

Banking on subsidies to help get its HD DVD players into consumers' living rooms, Toshiba is offering its players for $399. Most retailers offer a $100 rebate, and Amazon offers the machine for $249 through a special deal with Toshiba. But, Doherty said, Toshiba is losing money whereas Sony is making money on its $499 player.

"We should see prices stay steady for some time," Doherty said. "I expect there will be some Black Friday discounts and we'll see some fall products from Sony's competitors. We'll see Samsung, LG, and others come close to Sony, but they aren't able to make their own blue laser diodes so they may have higher costs than Sony."

Will the PS3 Follow?

Some are speculating about whether the PlayStation 3 will see price drops in the coming weeks. However, most analysts don't expect the PS3 to follow the BDP-300's lead. Sony might be waiting to see what Microsoft does with its Xbox 360.

"We think Microsoft is just about break-even with the Xbox and that Sony is at the break-even point this summer," Doherty said. "The PS3 delivers more in its package, though. If you wanted to get an equivalent to the PS3 on the Xbox side it would cost $670 because you would have to add on the HD DVD drive. So until there's some discounting from Microsoft, we don't except Sony to discount."

Envisioneering research shows the PlayStation 3 is selling at a faster rate six months after launch than the PlayStation 2 did. While the PlayStation 3 is often compared to Nintendo's Wii, which is half the price, Doherty said the battle between next-generation consoles is clearly between Sony and Microsoft.