Microsoft believes that the console war may be won in Europe.

"Europe for us is still the swing," said Jeff Bell, the head of global marketing for Microsoft’s games business. "The biggest challenge is that Sony as a brand has had greater staying power than in other areas. Not just Playstation 3, but Sony as a brand."

Bell also predicted that the Xbox 360 will sell more in Japan in 2008 then it has in 2007. "We will sell more consoles next year than this year," he said.

And despite the disappointment of Xbox continued failure to generate sales in the East, Bell pointed out that they "don’t want to trade places with anybody."