Industry observers are busy and swarming like mosquitos. Why? Because this is the time of year when holiday shopping predictions are made. Not even Hallmark has Christmas cards on the rack, yet people are aflutter with forecasting.

Maybe it is the economy that just won’t listen to Alan Greenspan. Sure he says it’s getting better, but it sure doesn’t seem that way. But predictions are begining to overtake news cycles. What’s going to happen? Will Visa-toting Americans rush to the stores, credit limits be damned? Or will they spend more frugally, like last year?

I have claimed to be many things, and offered opinions on many a subject here, but one area I try to stay away from is the economy. I know it sucks, but I have no valid opinion on what to do about it. Not that my opinion matters, but the issue is so complex, I honestly don’t understand how anyone can get their hands around it.

But I have uncovered one prediction that is dead wrong. Completely, off-base, dead ass wrong. Industry observers are saying that if Microsoft does not have a banner holiday sales cycle with the Xbox, they will have to rethink their entry into the console game market.

Are you snickering, too?

The Xbox still trails market leader Sony Corp.’s PlayStation 2 and Nintendo’s GameCube. And industry pundits have been pointing out that the game console niche has never supported 4 players. It’s 4 players because the standard PC is considered a competitor in this industry and we all know the PC isn’t going anywhere.

The pundits are predicting Microsoft needs to dominate the holiday season in the area of game consoles or they will likely end Xbox sometime next summer.

Again I ask, are you snickering, too?

When has Microsoft ever stopped producing a product because of weak market support? Ok, there was that Microsoft Bob thing, but they should have known better. Microsoft has a proven track record of beating the market into submission.

Microsoft has committed resources beyound comprehension to console gaming. They publically said they would be willing to swallow a $500 million dollar loss before Xbox becomes profitable. Half a billion. They are willing to loose half a billion making this work.

Partly because they know they have to fight Sony. Sony is not Netscape. Lets face it, Netscape sucks as a browser and a company. IE is one of the few products that Microsoft produced that really is better than the competition. Well, except Opera. Opera 6 and up is unbeatable.

But Sony is a titan and they have a ton of money. They have owned the market since the Playstation. They better enjoy it now because it won’t last long. And it has nothing to do with holiday sales expectations.

Microsoft will win the console wars because of one reason. Bill Gates hates to loose. That’s it. When Microsoft gets into a market they do whatever they need to get ahead fast even if it means shooting flies with a shotgun.

Late into the browser game? No problem. Just give it away for free. One year later enjoy an 89% share.

What? You don’t think Microsoft will give the Xbox away for free? Microsoft is estimated to lose anywhere from $76 to $150 on each Xbox which retails for $199. At that level of sustained losses, how hard would it be for them to say, give the Xbox away for free for one month? You’d likely have to pay upfront, but the rebate would be similar to the PeoplePC, where you evenutally end up with a $99 dollar PC when all is said and done. They take the loss now because all those people who got free Xbox’s will gladly ante up for the Xbox 2, which, by the way, is already on the planning table.

Consumers have complained about weak game choice in comparision to the Playstation. So what’s a company like Microsoft, whose sitting on top of billions in cash, to do?

Mircosoft purchases a major developer, Rare Ltd, for $400 million to make games for Xbox - a developer that until today, made games only for the GameCube.

See the trend? The steps have begun. They are going a tad slower than I expected. The Xbox has been out for nearly a year. I would have expected Microsoft to have made those steps from the git. But then again, they had the Justice Department breathing down their necks. So they have to pistol whip the market into shape a little slower than normal.

Listen up industry experts and pundits. Sales seasons do not apply to Microsoft. The console gaming industry has yet to learn how the market can be turned upside-down by Microsoft, but they will feel the changing winds very shortly.

And next year, you’ll be back on TV as an “expert” telling everyone how Microsoft did it.