Sony expects to ship 20 million PlayStation2 consoles in the current financial year, an increase on last year's total shipments and more than double those predicted by Microsoft for its Xbox console, according to the companies.

The forecast reveals further bad news from Microsoft, which is trying to unseat Sony as the king of the computer home-video gaming business but admitted last week it is currently lagging its rival.

Shipments in Japan have been lower than the company originally forecast. In preparation for the Japanese launch of Xbox, Microsoft exported 250,000 consoles and Bill Gates.

Among the initial consignment of consoles were 50,000 limited-edition machines — stocks of which even today remain in shops, including the very store where Gates launched the console.

The company also saw a fall off in sales in Europe in the weeks after launch and in mid-April slashed around 35 percent off the European and Australian prices to boost demand.

The company has yet to announce any plans for price cuts in Japan, but Bach said he knows the company has to crack the Japanese market if the Xbox is going to be successful.

"Japan is going to be a long-term investment," he said. "Japan is clearly going to be our toughest market. We've known that for a long time. We're certainly not selling as much as we'd like there."

Japan is key not just because it is a major consumer game market but also because it is the home country to many of the world's top game writers. A poor showing in Japan could make it difficult to attract Japanese software makers to the platform, and software, rather than hardware, is what usually sells consoles.