Analysts are predicting that Nintendo's Wii will be the best selling console in the world.

Merrill Lynch analyst Yoshiyuki Kinoshita said that a third of US and Japanese households will have a Wii console by 2011.

Market research group NPD expects the Wii to be North America's most popular console in January, selling 436,000 units compared to 294,000 for Microsoft's Xbox 360 and 244,000 for Sony's PlayStation 3.

NPD also found that Nintendo's Wii took a 68 per cent share of the 600,000 consoles sold in Japan, while the PlayStation 3 only picked up 25 per cent and the Xbox 360 just seven per cent.

"There has always been a strong concern that the Wii was gimmicky," Credit Suisse analyst Jay Defibaugh told the Financial Times. "But each passing month assuages that theory."

Since its debut in November the Wii has outsold the PlayStation 3 by a factor of two to one, but most analysts and industry experts agree that this generation of console wars has only just begun.

The Xbox 360 had a long head start and already has library of popular games, while the PlayStation 3 will only arrive in Europe this week.

But Sony's console is considered the most powerful of the three contenders and Sony has a very strong brand associated with the PlayStation.

The Wii is the cheapest of the three but does not have the raw power of its competitors, and sales may flag if developers cannot produce a steady stream of good quality games that make use of the innovative control system.