Microsoft Corp. (NASDAQ: MSFT) will be releasing the third installment in the Halo game series to its Xbox 360 platform on September 25, the company said this morning. As the first two Halo games are the best-selling games ever for the Xbox line of gaming consoles, this is no small announcement. The first Halo game was recognized by Microsoft as a reason some customers bought the game console itself, so when one of these sequels is released, better not be at a Best Buy (NYSE: BBY) at midnight on the release date.

Microsoft purchased Bungie Studios (which produced the first Halo game), largely because Halo became the game title that defined the Xbox experience -- it means that much to the software giant. All indications are that the purchase of Bungie was extremely profitable for the company, as Halo 2 sales topped $125 million in a single day in 2004. Whoa -- this is some kind of franchise, no?

The Halo franchise, so far, has been Microsoft's largest weapon in taking on Sony Corp. (NYSE: SNE) and Nintendo Ltd. (Other OTC: NTDOY) in the gaming business, which is now larger (by far) than the movie-making business (much to the chagrin of Hollywood). With sales of Halo and Halo 2 having made up quite a bit for Microsoft's losses in selling the hardware consoles themselves, will the release of Halo 3 this summer beat Sony further down? The PlayStation 3 maker has seen sales of its flagship gaming console flop due to high prices and short supply, while Nintendo's less advanced but more interactive Wii console has outsold it handily. When Microsoft releases Halo 3, it may pound Sony harder into the ground -- while giving Microsoft yet another excellent booster shot into a core area of its business.

Microsoft's (NASDAQ: MSFT) Halo 2 video game racked up sales of $125 million the day it hit the market. The world's largest software company believes that sales of the new Halo 3 game will be even larger. Aside from a version of the game for the Xbox 360, there will also be a Halo 3 for the Microsoft Zune.

According to one video game review publication, the newest version of the game is meant to fend off competition for the Sony (NYSE: SNE) PS3 and Nintendo Wii.

Video game industry experts say that Halo 3 has four million pre-orders from retailers, compared with 1.5 million for the launch of Halo 2. If that is true, it may add to the troubles for the already shaky start of the new PS3. Most surveys show the new Sony platform's sales lagging the unexpectedly popular Wii and the Xbox.

Wall Street and the gaming industry did not expect that Xbox, which was launched in late 2001, had much of a chance of catching Sony. The Japanese company simply had too large a lead. But, it is now Sony that is struggling to move back into first place. PS3 problems have even been blamed for the departure from Sony of PlayStation creator Ken Kutaragi.

The Microsoft way is to enter a business, out-develop and out-spend competition, and then finish them off. It seems to be working against Sony.

Douglas A. McIntyre is a partner at 24/7 Wall St.