Microsoft faces a crucial test this week as it prepares to stake its claim to a slice of Europe's lucrative computer gaming market with the launch of the Xbox console on this side of the Atlantic.
The Seattle-based software group - used to having its own way - is pouring a significant slug of its $500m (£351m) global marketing budget for Xbox into its European campaign. But success there is far from guaranteed.
To gain share against the undisputed market leader, Sony's PlayStation 2, Microsoft has created a console with one of the highest technical specifications ever seen. It has thrown in a bunch of extras that mean the Xbox is more like a cheap PC with a high-powered graphics chip than a traditional gaming console. But this has also made it more expensive than its rivals - especially Nintendo's GameCube, which is due to be launched in May.
Xbox is coming to Europe on the back of success in the American market, where more than 2m units have been sold since its release late last year, but after a lacklustre performance in Japan.
Success in Europe is critical if Microsoft is to prove capable of carving out a future in the consoles market, admits Sandy Duncan, vice-president of Xbox Europe. "Europe as a console market is as important as the US in terms of volume - if we are going to be successful we have to be successful over here."
Microsoft has stated repeatedly that it intends to be in the gaming market for the long term, and the high-speed internet capacity it has built into the Xbox suggests the company has an eye on turning the console into an entry to the consumer's home. But in Europe, where use of broadband is relatively rare, it is going to be a tough fight.
Microsoft is cagey about the number of Xboxes that will actually be available for European gamers when it launches on Thursday, and about exactly how it will measure its success. But to meet its target of 4.5m to 6m units sold worldwide by June this year, the company will need to sell a significant number over here.
Given Xbox's lack of traction so far in the Japanese market, where it launched three weeks ago, Europe will be critical for the success of Microsoft's global campaign. In Japan Xbox has been dogged by reports that it damages consumers' compact and video disks when they are played on the console.
Mr Duncan insists that particular problem has been resolved. He blamed adverse publicity that turned a few technical glitches into "Xbox ate my DVD" on the Japanese love of pristine electronic equipment. "There is some cultural element here, we have shipped over 2m into the US and we have no reports of this being a problem. These are very minor scratches that you can barely see and do not affect the ability to play the game or watch a movie - it is a minor problem and we think we have resolved it."
Analysts have been quick to point to the ability to link the Xbox to a high-speed internet - or broadband - connection as one of Xbox's key differences, especially when compared with the Nintendo GameCube. But Microsoft is adamant that the XBox will stand on its own.
"Broadband is going to be incredibly important, at some point. Right now, Xbox has vastly superior graphics, fantastic audio and a hard drive: those three pieces will offer better games. That is where the battle will be won and lost - broadband just enhances the experience."
That reluctance to trumpet the broadband capabilities of the console is understandable. While broadband take-up has been strong in the United States, the number of European gamers with broadband connections is expected to remain at a low level for several years.
Paul Jackson, an analyst in technographics at Forrester Research, predicts that broadband penetration will not rise for a couple of years - and even by 2006, only 24% of European households will have broadband access compared with about 4% at the moment.
"The problem is that territories that are traditionally strong buyers of consoles - mainly France and the UK - are actually below average in terms of their broadband penetration," he said.
By 2006 he says there will be only 10m European households using consoles to access online gaming. "Initially that sounds quite high, but when you realise that is across the whole of Europe and that it will be split between the three consoles, the returns are diminishing. Microsoft has almost jumped the gun in Europe by including base broadband capabilities in its console."
Xbox's Sandy Duncan admits the console's broadband capacity is forwards looking, rather than designed to make a splash from day one. "XBox has a life of something like five years, and over that time broadband will propagate itself - it is a chicken and egg situation, and maybe the XBox will be the catalyst for more broadband penetration," he said.
Certainly Microsoft's rivals over at Nintendo, who will be naturally paying particularly close attention to Thursday's launch, think the company has entered a blind alley. It will take several years before Europe has a sufficiently extensive broadband network to make online gaming a reality - and by then, the market will be ready for the next generation of consoles. "The success of any console in this business is not the technology that goes into the box, it is the games that come out of it. That is a fundamental difference between us and the other players in the market - we want to give gamers the ability to play great games," says David Gosen, the managing director of Nintendo Europe.
"A lot of people are getting very excited and talking up broadband and online gaming - when in fact, that is such a far-off dream. There is no business model that makes broadband a viable proposition today - or, to be honest, for some considerable time to come."
Nintendo, whose GameCube will be the cheapest of the three new consoles, is focusing all its attention on games - 20 will be available after the European launch on May 3.
Nintendo is shipping 500,000 units to stores for launch day itself and a total of 1m units over a two-month, post-launch period. Unlike Xbox, GameCube has done well in Japan, where it was launched last September, and had a solid start in the US, where it has been on the market since November. About 1.3m were shipped to North America and 1.1m to Japan.
With all this investment in new consoles, the financial markets are hoping to see an improvement in the fortunes of Europe's quoted software companies. Unfortunately, say the analysts, they are going to have to wait a while.
"I don't think the launches will stimulate the fundamentals of any of these businesses," says Nick Gibson, a software analyst at Durlacher. "It may revive some share prices but the real key to the games companies' success will be the ability to launch products on to a large installed base of hardware - and that will take some time to happen."
He estimates that the software industry is at the start of a four-year cycle that will start to peak in 2006, after which everyone will start talking about the next generation of consoles. He sees PlayStation 2 retaining its market leadership, with 90m-110m being sold by 2006.
Nintendo's GameCube and Microsoft's Xbox will fight for second place, with 25m-35m apiece sold by 2006, according to his forecasts.
It is shaping up to be a battle just as bloody and ruthless as any PlayStation, Xbox or GameCube shoot 'em up.
Gamer's choice
Xbox Microsoft, £299
Specification DVD ROM, 8GB hard drive, ethernet port, plays DVDs (with £20 remote control) and CDs
European launch March 14
Games at launch 20
Game cost £44
Watch for Halo - sci-fi adventure shoot 'em up with stunning graphics (Microsoft); Wreckless: The Yakuza Missions - high adrenaline driving game (Activision); Oddworld: Munch's Oddysee - the bug-eyed PlayStation hero gets a puzzle solving 3D outing on the high spec graphics of Xbox (Microsoft)
GameCube Nintendo, £160-170
Specification Links with Game Boy Advance, 56k modem optional, no ability to play CDs or DVDs
European launch May 3
Games at launch 20 plus
Game cost £44
Watch for Star Wars Rogue Leader Rogue Squadron II - exclusive to GameCube (LucasArts); also has exclusive rights to Resident Evil franchise (Capcom); Star Fox Adventures: Dinosaur Planet - has an oddly malevolent-looking hero in Fox McCloud (Nintendo)
PlayStation 2 Sony, £199
Specification DVD Rom, optional hard drive and broadband, plays DVDs and CDs
Available Since Nov 2000
Watch for Metal Gear Solid 2: Sons of Liberty (Konami) - rumoured to have racked up nearly £10m UK sales in its launch weekend
