What has become of the Sony known for its technology? I hope it will solve its problems soon to quickly recover its brand image reputed for technological prowess.”

– Japanese Economy, Trade and Industry Minister and former Sony employee Akira Amari, October 2006

Now that Sony’s old guard has taken what was once a strong electronics and gaming brand and run it into the ground, the company’s new guard is circling back to resurrect it. This morning the company announced a management overhaul that will see CEO Howard Stringer succeed Ryoji Chubachi as president and assume responsibility for Sony’s key electronics division. It will also see the creation of two new business groups: The first, Networked Products & Services Group, will consolidate Sony Computer Entertainment, the company’s Vaio division and its mobile and Walkman unit. The second, the New Consumer Products Group, will include Sony’s TV, digital imaging, home audio and video businesses. Spanning the two groups will be a cross-divisional software and technology unit charged with ensuring compatibility among their products.

Sony (SNE) says its new structure is aimed at giving the company the agility it has so sorely lacked for so long and to “speed up the transformation of Sony that was started four years ago,” which has all but stalled, if the company’s recent financial performance is any indication. “Have I broken down all the silo walls? No,” Stringer told the New York Times. “Are they very strong and very thick? Yes. But we’ve broken down a lot of them. Our goal is to continue to do that. We have two distinct challenges facing us. The first is the global slowdown, which forces us to make significant adjustments. The second challenge is the evolution of our competitive environment. New competitors springing out everywhere.”

The 17% cut comes just seven months after the PS3 arrived in the North American market and is essentially an acknowledgement that the device–as technologically advanced as it is–is just too damn expensive to woo gamers from Nintendo’s Wii. “From a pocketbook standpoint, we know we’ve presented a challenge for consumers,” said Jack Tretton, president of Sony Computer Entertainment of America. “Our initial expectation is that sales should double at a minimum. We’ve gotten our production issues behind us on the PlayStation 3, reaching a position to pass on the savings to consumers, and our attitude is the sooner the better.”

Of course, even after cutting the price, Sony will still have the most expensive game console on the market. Nintendo’s wildly popular Wii is just $250. Given that, it’s hard to see the massive spike in sales that Tretton predicts. “It’s still expensive,” said Michael Pachter, an analyst with Wedbush Morgan Securities. “With a 17% price cut, you may get a 50% increase in sales. It’s unrealistic to assume that demand will double.”

Word around the campfire is that Sony, which has been discussing “refinements” to the PS3′s price, will drop it to $499.99 from $599.99 on July 12.

Sony, of course, denies this. “We have no immediate plans as of now” for price cuts, President Ryoji Chubachi said today, noting that previous iterations of the console also had inauspicious beginnings at market. “If you take a look at how PlayStation and PlayStation 2 have taken off, this is not such an unusual start.” True. When its PlayStation 2 gaming console debuted in 2000, Sony posted an ugly loss. But by 2003, when component costs had dropped and game sales increased, the company’s PlayStation business accounted for about 10% of Sony’s revenue and 68% of its profit.