After nearly a year of sidestepping questions about plans to launch its Xbox games console in Hong Kong and China, Microsoft is gearing up to bring the US$200 device to the SAR in September, according to industry sources. The plans are said to include a marketing blitz featuring a Canto-pop star, with the aim of displacing Sony's Playstation 2 as the most popular console within two years. Prices are expected to be set slightly higher than in other markets initially and drop by Christmas, sources said. Hong Kong, Taiwan and Singapore are part of Microsoft's Asia Pacific plans for Xbox, while a mainland offering is yet to be confirmed. Company officials were not available for comment yesterday, though spokeswoman Anne Costello of the AugustOne public relations firm said Microsoft had firm plans for regional markets beyond Japan and Australia. 'We'll be announcing these expansion plans in the next few weeks,' she said. Xbox consoles are already available in Hong Kong as grey-market imports from Japan or the United States, with prices starting at around HK$1,400 at local computer malls. So far, Microsoft has released the Xbox in Europe, Australia and New Zealand. In markets where Xbox has launched, the price was brought down to the current US$200 earlier this year in order to compete with cuts by Sony and Nintendo's GameCube. Regardless of pricing, Microsoft will continue to lose money on each box sold; console makers try to recoup their investments through selling licences to game publishers. Microsoft has cited software piracy as one reason for its delay in introducing the Xbox in Asian markets. It has said the need to develop localised games and customer-service plans pushed back the launch in the region. Manufacturing capacity has also been cited in some reports, and sources close to the company say Microsoft is unlikely to supply enough consoles to satisfy local demand in the pre-Christmas marketing campaign. In entering the console market late last year, Microsoft made clear its ambitions to move from the computer desktop to the living room. According to the Informa Media Group, console and hardware sales will reach US$22 billion this year, accounting for 70 per cent of the market. By the end of the year, Sony, Nintendo and Microsoft will have sold more than 70 million units, with Sony taking 69 per cent of the console market with sales of 48.4 million PS2s. Nintendo is expected to come second with 15 million GameCubes and Microsoft selling 6.9 million units of the Xbox. Playstation 2 is popular in Hong Kong, both because it has been in the market longer and because of the large number of imported games available from Japan. Sony released the console in Hong Kong earlier this year. Microsoft officials have confirmed plans to launch in at least one Asian market. Eunice Chiu, general manager of Microsoft Taiwan, told the publication Digitimes that Xbox would launch in the island by the end of the year, while some local games developers were working on Chinese-language programs that would be released next year. Ms Chiu also said that the number of games available for Xbox would rise from about 75 to 275 by the end of this year. Microsoft has also been in talks to acquire games publishers, including Japan's Sega and Square Soft, as part of the company's efforts to expand its game library. The Xbox is considered to be powerful for a low-cost device, running on a 733 megahertz processor and capable of connecting to the Internet. The unit includes a DVD player and PC-compatible sound and graphics processors. The Xbox is produced by Singaporean contract manufacturer Flextronics, which recently relocated its non-US production from plants in Hungary to China. Plans to set up manufacturing with Taiwan's Wistron are unconfirmed. Microsoft, the world's largest software company, dominates in computer operating systems and office software, but has started an aggressive push to place its software in mobile phones, personal digital assistants and home entertainment devices. The company is said to be testing more multimedia functions for the Xbox, as well as preparing a router product that would allow home computing devices to be connected to each other. The company's plans for the Xbox include launching later this year an online gaming service named Xbox Live, which would allow users to play each other via the Internet. It will circumvent piracy issues as users must to log on and pay before playing. Sources close to the company said it was unlikely that the Xbox Live service would be launched in Hong Kong until next year at the earliest.