Following disappointing sales figures since the device launched earlier this year, Nintendo announced yesterday that it is set to slash the price of its Nintendo 3DS handheld console in a bid to spark interest in the device. However, its reductions are so generous that the company will actually take a substantial loss on every device sold, according to Bloomberg Japan.

Nintendo’s new prices go into effect on August 12 (so I suggest you postpone your 3DS purchase until after then). For those of you in the U.S., the device will drop from $249 to just $169, saving you $80. For those in Japan, the device will drop by 10,000 Yen to just 15,000 Yen; and in Australia from AU$350 to AU$250. Although Nintendo declined to offer figures for Europe, it did suggest the reduction would be around a third.

Nintendo isn’t the only company to lose out on its consoles, however, with Microsoft and Sony also accepting loses on the consoles they sell. So where do they make their money?

Through licensing: Every game sold for their systems must be licensed, and means they can afford to lose money on their hardware while they rake in money from the software. However, unlike the others, Nintendo has traditionally enjoyed profits on its consoles as well, according to TechRadarwhich served the company well when its Wii became such a massive success.

In addition to boosting its sales, some believe one of the reasons behind the price slash for the 3DS is to give the device a better chance against Sony’s upcoming PS Vita. David Cole of DFC Intelligence spoke with IndustryGamers and revealed that he believes Nintendo is already “feeling the heat” from the Vita:

“I just looked at their revised financial forecasts and they are ready to take a hit. They are really being aggressive. It is very unlike Nintendo to be willing to take such a loss. I think what it says is that they really feel the heat from the Sony Vita. I see it as a move to protect their market share and position in handhelds. I would not call it desperation but more a very aggressive defensive action by the market leader to hold on to market position.

“Sony I think can possibly play this to their advantage, although the price difference is tough. Sony is going up against a very aggressive leader in Nintendo. I think we can say that competition in the portable space should really heat up. That could be good for consumers that can take advantage of these deals.”

Of course, those that aren’t that enthusiastic about 3D may still be attracted to the 3DS now that its price has been cut. It makes the device only around $20 more then the DSi XL, and with new features such as the analogue stick, consumers may want to just go for the latest model. The 3D display on the 3DS can also be disabled if necessary.

[via TechCrunch, VG24/7]