MICROSOFT’S Xbox 360 brought a new level of realism to gaming as it went on sale across North America yesterday. The violence was all too real for one youth in Minot, North Dakota: he was mugged for his games console as he emerged from the shop.

But the serious fight is between Microsoft, which has invested $4 billion in Xbox 360, and its rivals Sony and Nintendo. Xbox marks the latest instalment of "corporate showdown", in which Microsoft wants to bridge the divide between office and living room before Sony can bring us PlayStation 3 and Nintendo its next generation Game Cube.

In a market worth $25 billion a year, Microsoft lies in joint second place with Nintendo — now gaining a boost in sales with the latest Harry Potter tie-in — and way behind Sony, which brought out PlayStation 2 a year ahead of the original Xbox to establish dominance.

Now Microsoft has rushed out Xbox 360, which is on sale in the US at $399 (£232), to try to turn the tables, but analysts say that it risks creating a demand that it cannot meet before PS3 appears in the spring.

Microsoft said that it expected to supply up to three million 360s worldwide within three months but admitted that the worldwide launch of the console could mean shortages before Christmas.

It is due to arrive in Europe on December 2 but the company admits that it will not have sufficient supplies to satisfy demand until the middle of next year. "We are finding them difficult to come by," a spokesman for Woolworths said. "We are not sure how many we are going to get, but it is likely that we will sell out on the day."

Some retailers are planning to open their bigger stores at midnight on December 1. A market for Xbox 360s has emerged on the eBay auction website, as people who have successfully reserved a console offer to sell them for more than £400.

This month Amazon and Game, leading internet retailers, said that they had already allotted their pre-order stock and would have no more available before Christmas.

At one store in New York yesterday gamers were disappointed to find that supplies of the top-end Xbox 360 had already run out. They were offered a cheaper version that cannot play games from the original Xbox. "It’s like buying a car without the engine," Eddie Buist, 29, said.

The Xbox 360 has a host of extra features intended to make it part of family life. It can play music, display photographs and show DVD films. It is curvy, white and silver, designed to be an attractive part of the living room, rather than the black box that looked at home only in teen bedrooms.

Bill Gates, Microsoft’s founder, said: "In the living room itself, Xbox 360 is our centrepiece and a product that redefines what goes on there."

He said that Microsoft would tie in its online gaming service, Xbox Live, with a new online initiative called Windows Live, designed to compete with similar online offerings from competitors such as Google and Yahoo.

Jennifer Kynett caught Xbox fever in Springfield Township, Ohio, where she queued overnight in freezing temperatures outside Wal-Mart with her husband, Mark, and 14-year-old son, Justin, for one of 18 Xboxes.

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