Xbox 360 to hit shelves before Thanksgiving

In an announcement at the Tokyo Game Show, the company said the new Xbox--Microsoft's entrant in the next-generation console wars--would hit store shelves in North America on Nov. 22, in Europe on Dec. 2 and in Japan on Dec. 10. The company clearly wanted to take advantage of the holiday shopping rush just before and after Thanksgiving in the United States.

"That's what you want to do to launch a console," said International Development Group market analyst Mike Sabine. "You definitely want to have it on shelves to enjoy the Thanksgiving shopping period."

Last month, Microsoft said the Xbox 360 would come in two flavors: a base model for $299 and a souped-up version with a 20GB hard drive and wireless controllers for $399.

The company is trying to alter a current-generation console landscape in which archrival Sony has sold 75.6 million PlayStation 2s, compared with Microsoft's sales of just 19.8 million Xboxes, according to IDC analyst Schelley Olhava.

For months, Microsoft has said it would have the Xbox 360 out in time for the holidays, and Wednesday's announcement confirms the company will get several months of first-mover advantage over Sony's forthcoming PlayStation 3 and Nintendo's Revolution, both of which are expected to be released next spring.

Though industry observers agree that Microsoft will benefit by getting the new Xbox to market before its competitors, no one is sure how long that advantage will last.

"Microsoft is ahead of Sony, and that's driven by their being first to market," said Olhava. "Is that going to equate to being dominant in the next generation of systems? I don't think the answer is so clear-cut with that."

Still, Microsoft said that by combining its new machine with its Xbox Live online gaming initiative, it has every hope of taking over the top spot in console gaming now firmly held by Sony.

"Our view with Xbox is that it's an overall program, which is a combination of the console, software and services," said Mitch Koch, Microsoft's corporate vice president for worldwide retail sales. "We have an outstanding online proposition through Live, and I think if we execute on that software, services and hardware strategy, we have a differentiated offering which should allow us to be very successful in the marketplace."

Indeed, Olhava estimates that the new Xbox will far outsell the PlayStation 3 and Revolution next year. She forecast that by the end of 2006, the Xbox 360 will have sold 12.3 million units worldwide, while Sony will have moved just 3.9 million PlayStation 3s and Nintendo just 2.7 million Revolutions.

However, she said that by the end of 2009, Sony will have surpassed Microsoft, and that by then the PlayStation 3 should hold the top next-generation console spot.

Sony didn't return a call for comment. Nintendo declined to comment.

Meanwhile, Koch said that by the end of this year, there are expected to be between 25 and 40 games on the market for the Xbox 360, a number that impresses analysts.

"That's more than anyone's ever had before," said Sabine, "so it's a very, very robust lineup of titles."

Microsoft said in a press release that those titles will include "Final Fantasy XI" from Square Enix, "Need for Speed Most Wanted" from Electronic Arts, Capcom's "Resident Evil 5" and many others.

Still, Olhava said her estimates that the PlayStation 3 would overtake the Xbox 360 are based on an expectation that publishers will eventually have more games for Sony's offering than for Microsoft's, and that that's something Microsoft will have to address.

"Microsoft needs to continue working on content," she said. "The main reason people buy video game consoles is to buy games that are only available for that console."

In any case, while Sony is almost certain to be months behind the Xbox 360 release, there is a lot of speculation that the Japanese company has a card it can play to try to steal some of Microsoft's thunder this fall.

"It wouldn't surprise me if (Sony) did drop the price" of the PlayStation 2 this holiday season to $129 or $99, Olhava said. "I think they probably will."

But Sabine said that even if that happens, it won't affect Xbox 360 sales.

"It could drive some continued interest in their strong PlayStation brand," Sabine said. "At the same time, they're not going to be taking consumers away from (Microsoft). A consumer who buys a PlayStation 2 (at a lower price) is a completely different consumer from someone who is going to buy an Xbox 360 at $300 or $400."

And regardless of whether Sony eventually overtakes Microsoft in the next-generation console battles, Sabine continued, Microsoft has nothing to worry about in the short term.

"The 360 is going to sell every unit they can possibly get into retail," he said. "Demand will always outstrip supply."