Jay Srivatsa, a senior analyst for research firm iSuppli, has recently gone on record saying he expects console sales to slow down over the next few years until the next set of hardware comes out. He expects sales to be flat for the year and down by up to 10% by 2005.

"I would say it's a reflection of the economy as well as the fact that there's no big excitement in the industry now," Srivatsa said in an interview. "The only thing to speak of in the industry now is online gaming, but that doesn't do much for console sales... The whole game console market is really in the doldrums now."

Sony has said it expects to sell 20 million units of its PlayStation 2 console during its current fiscal year, down from 22.5 million in the previous fiscal year. Microsoft expects to sell between 5.5 million and 7 million units of its Xbox console during its current fiscal year. Nintendo faces the biggest risk, Srivatsa said. The company has temporarily halted production of its GameCube console, to eat up excess inventory, and managed to ship a scant 80,000 units during its most recent quarter. "If they don't do anything significant, Nintendo won't sell any consoles next year," he said.

Srivatsa also predicted price cuts on all consoles in the lead-up to Christmas, with the PS2 and XBox dropping to around the $150 mark and GameCube ending up somewhere below that.

After this period the race will be on for the next generation of consoles. With Nintendo planning to release a machine before its rivals the pressure will really be on for all the companies. "I don't think [that], when the companies developed this generation of consoles, they were prepared for it to be so short,"