Microsoft's ( MSFT) move to roll out the new Xbox 360 game console Tuesday, ahead of the competition, has drawn the company loads of press, and potentially sizable sales.

But don't look for the company's rivals to concede defeat.

Sony ( SNE), for instance, has dominated the last two console cycles, and many analysts think the company's PlayStation 3, due out next year, will be more than a match for the Xbox 360.

And although few expect Nintendo's Revolution to be the champ this time around, the company has a proven track record in the game industry, and many analysts expect it to once again carve out a substantial niche when it launches next year.

( also looked this week at the perception of Microsoft's ballyhooed rollout; how far the company will make it into consumers' living rooms; and what the new games and new game machines mean for investors.)

"This is still Sony's market to lose," says Michael Goodman, who covers the video game industry as a senior analyst for the Yankee Group. "When the dust settles in three years or so, Sony will be back up on top. But it will be a close race."

How the race turns out will affect the three companies in salient ways. For Microsoft, its also-ran status in the current console cycle has been yielding losses that have weighed on its bottom line over the past five years.

In contrast, the PlayStation division has been one of the few bright spots for Sony in recent years, as it has lost ground in digital music players and other consumer electronics markets.

Nintendo, however, risks becoming a perpetual third player in a market that has seldom had room for even two.

With its launch of the Xbox 360, Microsoft is attempting to build on -- and learn from the mistakes of -- the original Xbox. In addition to being first to market, Microsoft is touting the device's high-definition graphics and sophisticated online game system.

The company hopes to broaden the demand for the device by allowing users to play "casual" games such as solitaire, and to play digital music and movies through it.

Microsoft plans to ship as many as 3 million units in the first 90 days after launch, and few analysts believe the company will have trouble selling them.

But Sony and Nintendo expect to sell large quantities of their game machines when they come to the market, and each has a strategy for taking on the competition.

Sony, hoping to build on its successes, is attempting to lure former PlayStation customers through backward compatibility; users will be able to play any of the 13,000 games developed for the PlayStation 2 or the original PlayStation on the new machine, the company says.

Sony also hopes to take a page out of its playbook from the PlayStation 2: It launched that machine, which played games stored on DVDs, when DVDs were becoming a mass-market phenomenon.

High-Definition DVD

The company is looking to repeat success with the PlayStation 3 -- the only new game console that will play games and movies stored on high-definition DVD discs.

The PlayStation 3 will play Blu-ray DVDs, one of two high-definition DVD formats, and when it debuts, the PlayStation 3 will likely be the lowest-priced Blu-ray DVD player on the market.

"We're looking at the PS3 ... as a Trojan horse in the high-definition DVD format wars," says Molly Smith, senior director of brand development at Sony Computer Entertainment America.

But the company is also hoping to win fans with what is clearly a very sophisticated piece of hardware. In addition to the Blu-ray drive, the PlayStation 3 will incorporate the new Cell processor, co-developed with IBM ( IBM) and Toshiba, which integrates eight CPUs onto one chip; a high-end graphics processor from Nvidia ( NVDA); and wireless networking technology.

Demonstrations of the machine's capabilities drew rave reviews at E3, in May, and some analysts think the PlayStation 3 will blow away the Xbox 360 when it debuts next spring.

"The PS3 ... is going to be phenomenal," says one fund manager who focuses on the video game sector. "I don't think Microsoft's going to win this console war as soon as the PS3 comes out." (The fund manager has no position in Microsoft or Sony.)

And Sony will be building on a strong foundation. The company has sold nearly 200 million consoles over the last two generations, far outpacing its rivals; Microsoft has sold about 22 million Xboxes.

"There's a lot of people there that have that huge brand loyalty to PlayStation," says Goodman. "If Microsoft can get it close, that's a huge accomplishment for them."

But getting close could prove difficult. Many analysts expect Sony to continue to dominate in Japan, where it has sold 22 million PlayStation 2s and where Microsoft has sold roughly 1 million Xboxes, says Goodman.

That's a lot of ground to make up, he and other analysts say.

"For all the talk about Xbox, if you look at the Japanese sales charts, you would laugh at Microsoft," says Joe Spiegel, a hedge fund manager at Dalek Capital, who is long Nintendo. "It would be impossible for them to do a worse job."

Still, Sony has its own problems. With other areas of Sony struggling, the PlayStation division may feel the need to milk sales of its profitable PlayStation 2 and PlayStation Portable machines, to the detriment of the upcoming console.

Some analysts see the battle between Microsoft and Sony shaping up to be almost equal outside of Japan.

"It's going to be hard to say till the PS3 gets here, but my gut right now is telling me that it will be neck and neck in North America and Europe," says Van Baker, who covers the video game business for research firm Gartner.

Et Tu, Nintendo?

And what of Nintendo? With the Revolution, the company is taking a different route than its two main rivals, focusing on creating a pure game machine that will include an innovative, wand-like controller, and letting Sony and Microsoft duke it out over which machine has more added features and is most powerful.

Nintendo wants to emphasize fun rather than high-definition graphics, and in so doing, lure innovative gamemakers by promising them relatively inexpensive development costs.

The company also hopes that creative, accessible games will attract women -- a demographic largely left out of the video game business -- and other first-time buyers.

Microsoft's and Sony's plan will "only get you so far," argues George Harrison, senior vice president of marketing for Nintendo.

Although Nintendo has been bested by Sony in the past two console cycles, it does have a record of success. Not only was Nintendo the leading console maker until the mid-1990s, but it also remains the leading handheld maker.

Additionally, on the handheld side, with games such as Nintendogs, the company seems to be profiting on its strategy of using accessible games to attract new consumers.

Still, many analysts believe that the Revolution will appeal only to Nintendo's core audience of preteen and adolescent gamers, and see Nintendo running a distant third to Sony and Microsoft.

"I'm expecting them be more or less where they are today. I don't see anything that Nintendo's doing that differentiates them," says Goodman. "It's great that they've got this funky controller, but I don't see that as anything that's going to move the market."

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