The consumer electronics giant on Monday chopped $30 off the price of its Clie PEG-S320, bringing the device to $169.
The company confirmed the cut and said that it took effect immediately.
The Clie PEG-S320 was announced in late June.
William Crawford, an analyst at U.S. Bancorp Piper Jaffray, said last month that at $199, the Sony device was already putting pressure on higher-priced models from Palm and Handspring.
"It's either wrecking the market or will dramatically expand it" by attracting new buyers, Crawford said at the time. "But from a competitive perspective, it is hurting" Palm and Handspring.
Sony licenses Palm's operating system for its Clie line of handhelds.
The Clie PEG-S320 is priced in the same range as Palm's $149 m105 but has the expansion capabilities of Palm's $249 m125, which was launched in mid-September.
The Clie PEG-S320 is Sony's best-selling handheld, according to a Sony representative, who said the price move was intended to "accelerate the growth of our most popular device."
According to recent data from market researcher NPD Intelect, although unit sales for handheld computers have grown this year, the average selling price has dropped, from $248 last August compared with $283 for the same month last year.
The research company also said that retail sales in the U.S. market grew just 11.9 percent in 2001, which was drastically lower than in 2000, when sales were up 207.5 percent.
News.com's Ian Fried contributed to this report.