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Sony said on Tuesday it will launch a new model of its PlayStation Portable (PSP) on October 16 in Japan, its latest bid to challenge Nintendo’s market-leading DS.

The PSP-3000, unveiled in August, comes with a built-in microphone and advanced LCD panel that is better suited for use outdoors and offers a shorter response time than the existing machine. The PSP already supports a Skype Web phone.

“The LCD is the face of a PSP, and it is an important feature of the 3000 model,” Sony Computer Entertainment Japan President Shawn Layden told a news conference in Japanese.

The new machine will sell for 19,800 yen ($182), the same price as the current PSP model. Worldwide, 41 million PSPs have been shipped compared to 78 million Nintendo DS units, including the DS Lite.

Meanwhile, Microsoft will lower the price of the entry-level Xbox 360 Arcade model, which has no hard drive, to around 19,800 yen (around $183) — less than a Nintendo Wii or PlayStation 3 in Japan. The new price drops the Xbox 360 below $200, the magic price barrier in video game machines, says Crave.

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