Sony says it is delighted by sales of the new console

Sony Computer Entertainment said it would revamp its European arm, with the potential loss of up to 160 jobs.

This was a response to changing market conditions, it said, and not the performance of the PS3, belatedly launched in Europe last month.

The model faces stiff rivalry from the Microsoft Xbox 360 and Nintendo Wii.

Costly delays

Sony said recently that it had already sold 800,000 PS3 units in Europe and was well on its way to meeting its overall sales target of six million consoles.

The Japanese company has dominated the $30bn games market for years, but fierce competition from Microsoft and Nintendo and delays to the launch of the PS3 in one of its key markets have put it on the back foot.

Sony Computer Entertainment said it was also looking at ways of saving money at its businesses in Japan and the US.

"We decided to streamline the company and also streamline some of the positions," said spokesman Nanako Kato, adding that the move was designed to "have more competitiveness".