Bloomberg reports that the platform holder is considering introducing a new higher-end model, having scrapped the 20GB PS3 in the US last week.

“It is in line with our strategy as we had planed to choose models based on consumer needs,” said an SCE spokesperson.

The report also states that Sony Corporation is targeting an operating profit margin of five per cent by March 2008 – around double the current margin.

Sony stock gained 2.7 per cent at the last close of the Tokyo Stock Exchange, having risen to a five year high. It is expected that operating profit for the year ending March 31st 2008 will reach 400 billion yen ($3.4 billion), exceeding estimates for 350 billion yen.

The news comes as further rumblings of an imminent price drop on the Sony console continue to spread across the web. Next-gen reports that Japanese investment firm Nomura has warned that Sony might struggle unless they slash the PS3's price.

"We think Sony will find it hard to get through the financial year without cutting the price of the console, and expect further game segment losses of over $1 billion during that period,” states the report.