Xbox exec's bold words

Bryan Lee, corporate vice president and chief financial officer in Microsoft's Home and Entertainment Division, had an attention-getting conclusion to his speech yesterday at the company's meeting with financial analysts, talking about the next-generation Xbox's chances against the next Sony Playstation. By way of explanation, the slide he was showing at the time indicated that the Xbox had attained No. 2 position in the console market Here's what he said:

We're very happy with what we've created, but when I showed this slide to some of the guys back at the Xbox team before I came here, there was one thing they were very dissatisfied with. They were very dissatisfied with seeing the number two. There are a lot of people right now who are focused, laser focused on being number one, being number one through innovation. They want to push innovation harder, faster and farther than anyone in the videogame business has ever seen before. And quite frankly they're going to push it harder, faster and farther than Sony has ever seen it handed to them before as well.

The next console cycle will be a major inflection point in the industry. Console cycles thus far have been primarily defined by the power of the hardware, and hardware is going to grow, no doubt about that, but future cycles are going to be defined by something else -- they're going to be defined by the power of the software that sits on top of that. It's truly going to redefine what interactive gaming really means.

Thus far interactive gaming has meant an immersive experience, being taken to places you've never been before, seeing characters, experiences you've never seen before; that will continue, that is first and foremost. But interactivity also means how do I interact with my friends, how do I interact with my other media, how do I interact with my PC and how do I interact with that multitude of devices that sit around my home or I take with me?

The company that can define those scenarios and execute on them will win the next console cycle. That company will either be Microsoft or it will be Sony.

So we think we've proven we can play; our goal now is to prove that we can lead.

Among other things, note that he didn't even mention the next-generation Nintendo console, the GameCube successor, as a potential contender. That's sure to get some attention and perhaps stoke the competitive fires among the folks at the Nintendo of America headquarters, around the corner from Microsoft's Redmond campus.

One other Xbox-related note: During his speech, Microsoft Chief Executive Steve Ballmer said there's no plan to release a second-generation Xbox in the current fiscal year, although he said the company is hard at work on the next video-game console. Microsoft hasn't announced a timeline for the next Xbox. Ballmer's statement wouldn't exclude the possibility of a launch prior to the 2005 holiday shopping season, because the current fiscal year ends in June 2005.