Sony was first off the block this morning, announcing the 25 percent price-cut in the early hours. Nintendo followed suit later on in the day with news of the cheaper N64.

In addition to the price-cuts, Sony is to add several new titles - A Bug's Life, Crash Bandicoot: WARPED, Gran Turismo, Spyro the Dragon, Cool Boarders 3 and Twisted Metal III - to its Greatest Hits Collection. The price drop for the hardware will be implemented August 23, with the extra titles entering the company's budget collection on the same day.

"The $99 price point has always been part of Sony Computer Entertainment America's strategy to bring the world's leading videogame entertainment system to the broadest audience," said Kaz Hirai, president and chief operating officer, SCEA. "With a console in more than one out of every five US households, we are well on our way to establishing PlayStation as the de-facto standard in videogame entertainment. Now with PlayStation set at $99, we have taken the next step in our long-range plan to bring the platform to a mainstream audience of all ages."

The Atomic Purple bundle from Nintendo will feature an N64 unit and two controllers for $99, while the Star Wars: Episode I: Racer bundle, which includes an N64 unit, one controller and the game, will be available for $120. The price drop is effective August 23.

"Thanks to our financial strength and rapidly growing market share, we are very pleased to make these exclusive hardware bundles available at these low price points,'' said Peter Main, Nintendo's executive vice president, sales and marketing. "With this new hardware pricing structure, boosted by $39.95 value pricing for worldwide smash hits like Banjo-Kazooie, GoldenEye 007 and The Legend of Zelda: Ocarina of Time, the best videogames ever created are now within reach of virtually all consumers."

Fantastic news for consumers, the price cuts should provoke an upsurge at retail after a dismal summer in terms of sales. Despite the aggressive marketing of the two consoles, the question on everyone's lips is just what affect this will have on the upcoming launch of Dreamcast.

In a recent interview with Games Business, former president of Sega America Bernie Stolar said that he was "not worried about those guys [Sony and Nintendo] for the launch period… I believe that no matter what they do we'll sell the numbers we're discussing."