Update: A representative of Microsoft told Shacknews that, "It is premature to speculate about Blu-ray but we do know from market data that HD movie playback is not a primary purchase driver for consumers buying video game consoles."

The representative added, "It continues to be games that drive purchase and that has consistently been a strong point for the Xbox 360 platform."

Original story: The ever-speculated Xbox 360 Blu-ray movie player add-on could arrive by May, according to rumors reported by Smarthouse. The site, which cites insiders at Microsoft, claims that the device's availability depends on "internal marketing and sales approvals," but that it may retail within three months.

Microsoft has long stated that it would consider an Xbox 360 Blu-ray add-on if consumers chose Blu-ray over HD DVD. "It should be consumer choice; and if [Blu-ray is] the way they vote, that's something we'll have to consider," Xbox group marketing manager Albert Penello said earlier this year.

Microsoft just lowered the price of the Xbox 360 HD DVD add-on, a move many saw as a last-ditch effort, and rumors are now circulating that primary HD DVD backer Toshiba may axe the format as soon as this week.

The site further reports that Microsoft is working on a Xbox 360 model with Blu-ray compatibility built-in, a claim that sounds eerily similar to Smarthouse's previous rumor of an HD DVD-equipped Xbox 360. The site also indicates that the company will continue focusing on downloadable and streaming high-definition movies, a claim director Michael Bay will no doubt take as proof of his claims that Microsoft is intentionally sabotaging both Blu-ray and HD DVD.

Research firm iSuppli estimates that Sony's PlayStation 3 will exceed sales of the Wii and Xbox 360 by 2011, reports Reuters.

iSuppli reckons that strong momentum of the system will build during 2008, estimating that Sony will sell roughly 10.2 million PS3s worldwide through the year and double its install base to over 20 million users. Sustained growth will propel the PS3 to some 38.4 million users by 2011, which the firm suggests will position Sony as the "industry leader" in installed units.

The Wii is projected to maintain its lead through 2008, selling 12.2 million hardware units and putting it on top for the year at over 30 million users worldwide. iSuppli's estimate of the Wii's total market share in 2011 was not provided, but the firm's projection that the PS3 will lead at 38.4 million units by 2011 seems to indicate that it believes the Wii will sell less than 8.2 million units over three years.

January hardware sales figures reported by sales-tracking firm NPD yesterday show that the PlayStation 3 outsold the Xbox 360 for the first time since the system launched in November, 2006.

Sales-tracking firm The NPD Group has issued its analysis of North American console hardware sales across January 2008, showing the Wii and PlayStation 3 outselling the Xbox 360.

1. Wii - 274,000
2. PlayStation 3 - 269,000
3. Nintendo DS - 251,000
4. PSP - 230,000
5. Xbox 360 - 230,000

Totaling $377.8 million, hardware sales were down 25% compared to the last January. "Given the huge number of hardware systems sold in December, inventory shortages could be the biggest contributor to the softer than expected sales," analyst Anita Frazier reasoned.

In related news, a Microsoft representative told Shacknews that the Xbox 360 is currently experiencing shortages. "Xbox 360 is selling as fast as [retailers] can restock," the rep stated. "We are working as quickly as we can to replenish inventory."

The firm also released figures highlighting the month's best-selling software.

Pacific Crest Securities analyst Evan Wilson has suggested that Microsoft and Nintendo will unveil hardware follow-ups to the Xbox 360 and Wii in 2010.

"We believe that peak industry sales will occur in 2010, given that Microsoft will likely introduce its next console that year and Nintendo will likely launch before then," Wilson told GameSpot. "Further, 2010 is also likely to coincide with the end of the Nintendo DS and Sony PSP cycles."

The 360 and Wii were released in late 2005 and 2006 respectively, pinning Wilson's projections on a four to five year product life cycle for the consoles. Wilson made no projection for a PlayStation 3 follow-up, owing perhaps to the high costs of the PlayStation 3 and Sony's projections of a ten year life cycle for the console.

Electronics warranty dealer SquareTrade has estimated the Xbox 360 hardware failure rate around 16%, 1UP reports.

In a sample of over a thousand warranties sold to Xbox 360 owners, the company found that 16.4% of users experienced hardware failure, with some 60% of that number attributed to the infamous "red ring of death."

In response to hardware failure rates—which Microsoft estimates around 3%—Microsoft recently expanded their out-of-box warranty to three years from date of sale. "It is reasonable to believe these failure rates will increase over time since the Xbox 360 failure issues tend to increase with prolonged use where overheating appears the main culprit," said SquareTrade CEO Steve Abernethy.

But widespread reports of the red ring and hardware failure hasn't stymied consumer demand for the Xbox 360, which Microsoft says is in short supply... Read more

The price of the Xbox 360 HD DVD player add-on has dropped from $179.99 to $129.99, Xbox Live director of programming Larry "Major Nelson" Hyrb has announced.

The reduction is effective in the United States, Canada, Australia and New Zealand, and units sold at the new price will continue to include the five free HD DVD offer out of the box. The player's functionality is strictly limited to the play of HD DVD and DVD discs. In early January, Warner Bros. abandoned HD DVD in favor of Blu-ray, sounding the death knell of the format with the loss of one of its greatest supporters.

The add-on, originally debuted in November of 2006 for $199.99, and dropped to $179.99 in July of 2007. Microsoft has since reaffirmed that the company would consider a Blu-ray add-on for the Xbox 360 if consumers continue to support the format over HD DVD.

Acclaimed director Michael Bay, meanwhile, maintains that Microsoft is intentionally sabotaging both Blu-ray and HD DVD.

Nintendo today confirmed earlier rumors by announcing a Cobalt/Black version of the DS Lite, which the comapny describes as "like a black T-shirt with a splash of color."

The dark blue color marks the seventh shade the system has received since its inception, and stands as the next logical step on the color wheel following Polar White, Coral Pink, Onyx, Crimson/Black, and the limited-edition Gold and Metallic Rose.

The newly painted systems will hit stores on February 10.

The latest firmware update for the PSP has arrived in North America and Europe, bringing the popular internet voice chat software Skype to the recently redesigned handheld.

The chat software, which is only compatible with the slimmer model of the portable due to its increased internal memory, permits users to call other Skype members for free and traditional telephone numbers at a cost.

In addition to the slim PSP, other requirements for Skype include a wireless internet connection, memory stick, and microphone headset.

The 3.90 firmware can be obtained by selecting Network Update from the PSP's settings menu. It should also be available from Sony's official system update page later today.

New sales data released by Nintendo illustrates the company's fiscal year third quarter performance, broken down in hardware and software sales by region.

Nintendo's Wii hardware made its strongest showing at retail in the Americas, but software sales were around 15% higher in Europe. Meanwhile, DS hardware sales were strongest in Europe for the third quarter, but software sales in the Americas were roughly 45% higher.

Additionally, in transcripts of Nintendo's third quarter report meeting translated by Develop, the company said that it believes that the underperformance of third-party software on the Wii is only temporary, citing the console's short time on the market for in-house development's advantage over third-party software.

"Our software sales percentage is currently high because our internal teams teams know the Wii's special characteristics best, and they started development quite a bit before the Wii's release," the company said. "However, we believe ... Read more

The 80GB PlayStation 3 will be phased out in favor of a model with a larger hard drive, reports Ars Technica.

According to an unnamed source, Sony will continue offering the 40GB model alongside a "120 or 160GB at the same [$499.99] price point, plus the new DualShock 3 controller," building upon the recent suspicion that the 80GB model is being phased out of production.

The source did not indicate whether any further changes were in the works for this latest addition to Sony's ever evolving dual-SKU model, such as the redesigned and downsized Blu-ray laser or fully-fledged backwards compatibility.

When reached for comment a representative of SCEA told Shacknews, "We don't comment on rumor or speculation."

Update: In a response to Shacknews, an SCEA representative did not comment on the subject of Best Buy's alleged discontinuation of the 80GB PS3, but indicated that a post addressing the matter will soon be on the official PlayStation blog.

Original Story: Best Buy will apparently discontinue sales of the $499 80GB version of the PlayStation 3, according to an alleged internal store memo sent to PS3 Fanboy.

"The 80GB version of the PS3 is going closeout and won't be replaced at this time," the memo reads. "The 60GB version should already be gone from stores. Only the 40GB version of PS3 will be sold in Best Buy stores at this time."

The remaining 40GB model, currently priced at $399 lacks a handful of features available in the 80GB PlayStation 3, including a complete absence of PS2 backwards compatibility—which the memo itself notes.

Earlier this week, FCC listings for a white PS3 prompted speculation that the new color would be heading to North American shores. SCEA has been reached for comment, but has not responded as of this writing.

The North American release of Skype for the PSP is still on track despite Sony Computer Entertainment Japan's delay of the Japanese edition, SCEA has confirmed with Shacknews.

As previously reported, the voice chat software will arrive by the end of January as part of a firmware update for the slim, redesigned PSP.

SCEJ announced the delay of the Japanese version this morning. According to the company, a USB microphone that was slated to hit Japanese retailers did not meet Skype's standards.

Wedbush Morgan analyst Michael Pachter is predicting that Nintendo will report sales of $5.28 billion in its Q3 report on January 24, and raise its fiscal year 2008 sales outlook above its current value of $14.5 billion, Gamasutra reports.

Global DS and Wii hardware sales during the third quarter, estimated around 12 million and 7 million respectively, were cited for the boost in projected yearly earnings. "Nintendo's recent financial performance has been spectacular and we continue to believe its FY:08 guidance is conservative," said Pachter.

Japanese commercial research company Enterbrain also reported that Nintendo sold 5,019,337 Wiis in Japan since its late 2006 launch. As of December 2007, the total North American install base for the Wii was over 7 million.

Meanwhile, Sony's PlayStation 3 has enjoyed a boost in sales worldwide... Read more

Update: A Sony Computer Entertainment America representative has responded to Shacknews' inquiry, insinuating that the filing was routine and is not necessarily indicative of a forthcoming release.

"There are many FCC filings like this each year," explained the representative. "We haven't made any announcements about upcoming PS3 plans, but are comfortable with our current two SKU strategy. We are continually evaluating the market trends and consumer input to determine the appropriate PS3 models for our territory."

Original Story: Recent FCC listings indicate that Sony Computer Entertainment will be bringing the white PlayStation 3 to North America.

Released in Japan last fall, the white PS3 is functionally identical to the $399 black 40GB model that arrived in North America at about the same time. It features built-in Wi-Fi support, two USB ports--down from the four of the launch PS3 units--and lacks the ability to play PlayStation 2 software. The white Japanese model included a 40GB hard drive as well.

The reduced feature list, along with the lower price point, have been... Read more

Sony has released a handful of images of the new Skype headset for the slim PSP, officially announced earlier this week.

You may remember the Skype PSP headset back in its heyday of being a plain ol' PSP headset, originally released in late 2005 alongside Zipper Interactive's SOCOM: U.S. Navy SEALs Fireteam Bravo (PSP) to support the game's built-in online voice chat function. What's old is new again!

Providing a simple side-step to players exhausted by the bickerin' and lawyerin' between Harmonix and Activision, Nyko has unveiled its Front Man guitar peripheral, functional with both Rock Band and Guitar Hero III on the PS3.

PS3 Front Man adopters will be able to swap Rock Band and GHIII compatibility with the flick of a switch on an included dongle—not as simple as an out-of-the-box solution, but it gets the job done. The Front Man will net 80 hours of wireless play on two AA batteries and will be functionally identical to first-party guitar peripherals.

Due out for the Wii, 360 and the PS3 in March, the Front Man will be available at a $50 price-point. Activision and Harmonix both plan to release standalone peripherals in early 2008, but haven't yet revealed any specifics. Last week, Mad Catz announced that the company had acquired a license to produce Rock Band instruments.

An Xbox 360 add-on that would enable the console to play Blu-ray format movies is possible, Microsoft has reaffirmed.

"It should be consumer choice; and if [Blu-ray is] the way they vote, that's something we'll have to consider," Xbox group marketing manager Albert Penello told Reuters of the ongoing format war between HD DVD and Blu-ray.

Microsoft previously released an external Xbox 360 accessory that allowed the system to play HD DVD discs. In the past, former corporate VP Peter Moore noted that consumer demand could bring a Blu-ray add-on to the Xbox 360.

The optional HD DVD drive makes the Xbox 360 the only console that can play HD DVD movies, while the PlayStation 3 is the only console that can play Blu-ray movies due to its internal Blu-ray drive. Though PS3 games are pressed on Blu-ray discs as well, the 360 only uses the HD DVD format for movies, with games arriving on regular old DVDs.

News of Warner Bros. abandoning the HD DVD has many signaling the end of the HD format war, with Paramount, one of the last major HD DVD backers, rumored to be leaving the format as well. "You can't say it's not a bummer, not a setback, but I've seen this battle declared over so many times," said Penello.

Acclaimed director Michael Bay, meanwhile, remains firm in his belief that Microsoft is intentionally sabotaging both Blu-ray and HD DVD.

It doesn't seem like very long ago that the use of the PSP was limited to a handful of decent games and You Got Served on UMD video—suddenly, it's 2008 and there's actually a great deal of use to be squeezed out of Sony's little handheld that could, including a bevy of new features unveiled at this year's CES.

Today, Sony officially confirmed to Gamasutra that certain Blu-ray movies will allow the uploading of a version of the content to the PSP at no additional cost. Also revealed were plans to deliver other additional content from supported discs, including mobile ringtones and games, through the coming year.

Additionally, the PSP camera and GPS receiver peripherals—already available in Japan and Europe—have been officially dated for a North American release in that vague, "around the end of the year" sort of way. Sony representatives could not offer a more specific time.

PSP owners who fall into fits of hysteria and violence at the thought... Read more

Responding to Activision CEO Bobby Kotick's comments that Sony and Microsoft need to drop the prices of their respective systems to $199 within the next two years, SCEA president and CEO Jack Tretton has labeled Kotick's analysis as inappropriate and unwelcome.

"I would never venture to suggest what software publishers should price their software at," Tretton told The Mercury News. "I don't think it's appropriate for them to suggest what hardware should be priced at."

Tretton argued that with slimmer profits for the hardware maker, there would be no platforms to publish on in the first place, insinuating that Kotick's suggestion would result in further significant losses on the PlayStation 3 hardware.

In its last fiscal quarter, Sony's game division lost nearly $841 million as the PlayStation 3 hardware was being sold at a loss. The system has undergone a series of drops since it released last fall at $499 and $599, with the most recent introducing a $399 version of the hardware.

"I don’t know, maybe [Kotick] should design a platform," Tretton suggested.

Pre-paid PlayStation Network purchase cards are likely to be available in stores in the near future. Shacknews today received a $20 PSN gift card, accompanied by a holiday greeting card. The greeting card came with the signatures of Sony's public relation team members, but without an explanation of the PSN credit. (The whole envelope was, bafflingly, addressed to one David Ellison of Shacknews. We are fairly certain we do not employ anybody by that name.) [Update: According to the PlayStation Blog, the cards will be available at retail in early 2008.]

The cards may be spent on any PlayStation Store purchases, via either the PlayStation 3 online store or the PC-based PSP store, accommodating gamers without access to credit cards. For impressions of the recently-launched full downloadable PSP games, head over to the blog.