The target was announced by Xbox marketing boss Peter Moore at a video games conference in London.

The 360 is due to go on sale before Christmas in the US, Europe, and Japan.

Sony's PlayStation 3 is due out in spring 2006 and Nintendo's Revolution later next year. Microsoft is counting on being first with its Xbox 360.

It wants to take an early lead in the battle to dominate the next generation of consoles.

Ambitious target

The software giant was a year behind Sony's PlayStation 2 in launching the original Xbox and it never managed to make up the time in sales.

This time round, Microsoft is aiming to grab what Mr Moore called the "first mover advantage".

"The target of 10 million units gives tremendous momentum to a platform," said the Xbox executive during his keynote access at the Elspa (Entertainment and Leisure Software Publishers Association) games summit in London.

Pressed on the issue, Mr Moore added that he believed Microsoft could reach the 10 million mark in 12 to 16 months.

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He dismissed suggestions that being first with a new piece of technology was a mistake.

He said the Xbox 360 was not the Dreamcast, referring to the Sega machine that can out in the late 1990s, only to be overshadowed by the release of the PlayStation 2.

Microsoft has said the 360 will go on sale in the US some time after Thanksgiving in November, with Europe and Japan following shortly afterwards.

Sony fight back

For its part, Sony has talked about releasing its PlayStation 3 in the spring of 2006.

Asked about the European release of the PS3, Sony Computer entertainment Europe President David Reeves, said he did not know when this would happen.

"I would like to think we would get it in Europe around the same time as Japan," he said at the Elspa summit.

"That first mover advantage is real if you have momentum," said Mr Reeves, adding that Sony was ready to do battle with Microsoft.