Sony is giving its PSP Go gaming handheld a much-needed shot in the arm today with the announcement of a price cut from $249 to $199. The move comes just in time for the holiday shopping season and puts the device at just $30 more than Nintendo's DSi XL, $50 more than the DSi, and $70 more than the DSi Lite. The company may face some in-house competition as well, though, with the PSP-3000 currently selling for $169.

The PSP Go represents a major shift for Sony in the handheld arena as it attempts to move away from packaged media in favor of digital downloads. Besides reduced distribution costs, the move would, in theory, give Sony a better fighting chance against the used games market and piracy. But while the idea sounds good on paper - we've seen how well some iOS games are selling - execution apparently fell short of customers' expectations. After all, the PSP Go doesn't bring much to the table besides a smaller, lighter build and more memory, while dropping support for UMD media and carrying a smaller games library for a heftier price tag.

In August, market researcher NPD estimated the PSP sold just 79,400 units compared to around 140,300 a year earlier. Sony hasn't revealed exact sales figures for the Go, but the device is widely believed to be a flop, with a separate study from tracking firm Media Create putting the number at 23,455 for the first three months of 2010. By comparison, the Nintendo DS - including all its variants - sells upwards of 250,000 units each month.