By Darren Waters BBC News Online

Christmas 2002 is the crucial battleground for Sony, Nintendo and Microsoft.

The three games giants are each heavily pushing their consoles to a market now worth more than $20bn-a-year globally.

With about 40% of all games console bought in the final two months of a year, the three companies are pushing their products, the Xbox, PlayStation 2, and GameCube, hard.

The three machines are all being offered in a variety of bundles, with free or cut price games as part of a package.

All of the companies are reporting increased sales in the UK - PS2 sales are up 39%, Xbox sales up 42% and GameCube sales are also up 27%.

Bundle deals

Splinter Cell on Xbox has boosted sales

The PS2 figures remain astounding given that it is the oldest and most underpowered of the three machines.

Despite the improved specifications and technical jargon boasting more polygons per second for the Xbox and GameCube, consumers remain enamoured with Sony's black machine.

The Xbox's bundle of the machine plus two games, Sega GT and Jet Set Radio, at �159 is particularly impressive considering that the machine was being sold for �299 in the UK on its own less than a year ago. It also shows Microsoft's burning desire for success.

The release of the Xbox exclusive title Splinter Cell, due for release on other platforms next year, has also boosted sales of the machine.

The widespread brand familiarity of Sony, both with children and parents, remains PS2's biggest asset, along with the largest catalogue of titles.

GameCube is struggling in the US and Europe, and the release of big title Super Mario Sunshine has not quite had the impact Nintendo would have been hoping for.

Battle for second place

Sony's machine has a huge array of games

Ironically, despite the stiff competition many observers concede that the so-called console war was won by Sony long ago.

The Japanese giant has shifted more than 41 million consoles and given the machine such a head start that Nintendo's GameCube and Microsoft's Xbox are battling for second place.

But second place should not be dismissed. Historically the market has only ever managed to support two consoles and third place for either Microsoft or Nintendo could spell the demise for either machine.

In terms of sales, Microsoft are in firm second place in the US. In Europe it is on level pegging with Nintendo in joint second place but the Xbox is struggling to make any impact in Japan.

Microsoft has deep pockets, however. Not many companies could afford to make a reported $100 to $150 loss on each machine sold.

The question is why the company is prepared to make such losses on what is considered to be a toy.

Ambitious plans

Sony is the undisputed market leader

But the long-term battle, between Xbox 2, PlayStation 3 or the GameCube successor, is about more than just playing games.

The battle is about having a box in every home on the planet that will play DVDs, CDs, mp3s, allow you to surf the net, download content and record TV programmes.

Sony have never shied away from admitting that their long term plans for PlayStation are far more ambitious that simply gaming.

Microsoft has been far more circumspect. At present it will only say the machine is a games console.

But the ambitious Xbox Live online system, together with the hardware and software infrastructure the company has in place, would make the Xbox an ideal platform for surfing and performing multi-media tasks in the home.

Nintendo are a force in Japan

But all that is for the future: in the present it remains a three-way choice over which system to buy.

All machines are excellent products, especially so given the price-cutting and bundling deals available.

Any of them would be welcome on Christmas Day.

Whether or not the console will have the same appeal in 12 months time is another question, with no definite answer.