Yankee Group, a U.S.-based research firm, said that while Microsoft Corp. has a significant lead over Sony Computer Entertainment Inc. in terms of launching its next-generation game console one year ahead of Sony, eventually the latter will get larger piece of the game console market pie in the United States. But this will happen only in 2011 and the Japanese company will have only 4% market share lead.

According to the Yankee Group DecisionNote, “Can Sony Hold Off Microsoft as Video Game Consoles Emerge as a Platform for Digital Distribution?”, by 2011 the PlaySation 3 (PS3) will have sold about 30 million units and account for 44% of cumulative third-generation console sales in North America. Comparatively, Microsoft will have sold nearly 27 million units by 2011, accounting for 40% of the market and Nintendo will have sold just over 11 million units, accounting for 16% of the market.

Yankee group also believes that overall, fewer consoles will be sold this generation. Yankee Group anticipates that as a result of higher console prices, overall unit sales will lag the previous generation of consoles (GameCube, PlayStation 2, Xbox).

But given that the prices on consoles from Microsoft and Sony are fairly high due to increased costs of hardware used, Microsoft will put significant price pressure on Sony during the PS3’s lifecycle, believes the research firm. “In addition to starting at a lower price than the PS3, Microsoft is well positioned to make a large price cut in the spring of 2007 and each year thereafter putting significant price pressure on Sony,” believes the firm.

“With a growing installed base of connected consoles, content owners are beginning to recognize the potential video game consoles offer as a distribution channel. Additionally, these platforms will serve as a strong medium for advertising, validating the growing market for in-game and around game advertising,” added Michael Goodman, Yankee Group media and entertainment strategies senior analyst.