As reported recently, Nintendo, Ltd.'s (OTC: NTDOY) Wii gaming console climbed ahead of Microsoft Corp.'s (NASDAQ: MSFT) Xbox 360 gaming console in sales. While Microsoft's console has been around for almost two years, the Nintendo Wii was only released last November. This came as no surprise to me, as the cost of the Wii is significantly lower and it seems to appeal to a wider audience. The Xbox 360 is in a different universe technically, but to reach out to the mass population, 'polygons per second' is meaningless. Mass customers want interactive fun as an experience rather than ultra-realism in the game itself.

Microsoft is not down by any means, but the company still -- still -- is not making much (if anything at all) on the Xbox. The hardware system simply costs too much and sales are too low to make the platform profitable. Meanwhile, Nintendo is reportedly making a nice profit on the Wii already, since it did not use cutting-edge components and sales have been high. Microsoft just can't turn tail and run away, as the company has invested billions in the Xbox platform and overall gaming division. So, what can it do?

How about a focus on a different area of the world? Microsoft's group product manager Aaron Greenberg recently hinted at this, saying, "The number one objective is to win on a global basis and that may mean winning some markets and losing others." Does that mean Microsoft is prepared to hand over the most popular gaming console crown to Nintendo in the U.S. and concentrate efforts in, say, Europe? That seems like the obvious answer. Both Microsoft and Nintendo are global companies, and becoming numero uno in every global region is one mighty goal in the market for the next best gaming console. Microsoft's sales have soured in Japan, so Europe may be a large focus for the software maker as the Xbox 360 product life winds down in the next few years.