Microsoft ready to throw good money after bad in console war

Sony's PlayStation 2 is once again dominating the Christmas sales race, ahead of rival consoles, such as Microsoft's Xbox, forcing the US software giant to throw even more money at its Xbox division rather than concede defeat.

The video games market is worth an estimated $10bn worldwide and Microsoft isn't ready to give up its share of the pie.

John Connors, CFO of Microsoft, said yesterday in a webcast that the company has no 'exit strategy' for the Xbox venture, saying the only option is to persevere.

"The fallback position is probably to double down and make it successful," he said.

Microsoft's home entertainment division, which includes the Xbox, lost $177m last quarter. However, that hasn't stopped analysts predicting that the software giant is ready to invest as much a $2bn over the next five years in attempt to carve secure its place in the games market.

However, it will take more than money to overthrow market leader Sony, whose PlayStation 2 console is making the most of it first mover advantage and ready made bases of fans and game developers as a result of the PlayStation 1.

In the last week of November alone, Sony shifted 90,000 consoles.

In comparison, Microsoft and Nintendo could barely muster 30,000 sales between them, suggesting the UK at least will once again ensure a very merry Christmas for Sony.