Microsoft to Unveil Its Wii Competitor: Kinect

Microsoft will launch its challenge to the Wii this week -- a motion-sensing video-gaming device called Kinect, according to a number of media sources. The huge success of Nintendo's (NTDOY) Wii, a game console designed for casual players, has been a setback for the Sony (SNE) PS3 and Microsoft (MSFT) Xbox 360, which both trail the Wii in sales. But Microsoft hopes this is about to change. The product will be officially announced at E3, the annual gaming convention, which begins Tuesday in Los Angeles.

The new Microsoft console will have no controllers. A number of games designed for it can be played with simple body motions. The Kinect will probably also run on voice commands. Microsoft's strategy may be to bring in new customers -- and also to extend the life of the aging Xbox platform.

If it sells well, the Kinect will be the first real challenge to the Wii franchise, which has been struggling in recent quarters. And it may help revive overall console sales, which have dropped almost every month since the start of the recession.