Microsoft unveiled the latest version of its entertainment-focused operating system Tuesday, seeking a broader audience on a wider array of computers and stoked by partnerships offering music, movies and even recorded books. Microsoft Chairman Bill Gates, who showed off Windows XP Media Center Edition in Hollywood Tuesday, called the third version ''a major milestone'' but stressed it is still a long-term venture for Microsoft.

``This is something where you have to be willing to invest like we have over a number of years and really listen to the customers, build the partnerships,'' he said in an Associated Press interview prior to the event.

Gates said the company plans to put more money and effort into marketing the new version of Media Center, particularly to mainstream users. ``This is where we've decided to really raise the noise level up quite dramatically,'' he said. Microsoft has offered versions of the Media Center system, which allows people to watch and record live television, listen to music and DVDs, and view digital photos, for about two years. More people are using PCs as entertainment hubs in their living rooms.

Microsoft says it has sold about 1 million copies of the earlier versions. Analyst Rob Enderle said the higher price of high-end entertainment computers -- which can easily run to $2,000 -- had restricted sales mostly to gadget enthusiasts and premium entertainment - like the guys at X365. Now, Enderle thinks improved technology and more widespread use of PCs for entertainment could boost demand. ``You can start to see what it's going to be like when it grows up,'' he said.

Microsoft is now seeing many entertainment companies -- from video-on-demand provider Akimbo Systems to news radio service National Public Radio -- jump on the bandwagon. The availability of songs, videos and other forms of entertainment from such partnerships could attract more users. Analyst Joe Wilcox of Jupiter Research said more consumers already are using PCs as an entertainment hub in their living rooms. Data from Jupiter also shows that about half of all consumers would be interested in watching TV shows on a PC, he said.

The new system will support high-definition television by the end of the year, in addition to allowing users to watch and record up to three television shows at a time and to pause live television. Another potential advantage for consumers is that advanced copyright protection technology will make it easier to legally transfer music, videos and other data from Media Center PC to portable players and cell phones.

Beginning Oct. 17, users will be able to buy previously announced ``extenders'' for about $300 to transfer music or videos stored on their Media Center PC to another television or computer.

For around $80, the company will soon offer technology that allows Microsoft's Xbox game console to serve as a conduit for music and videos.

That's one element of Microsoft's plan to interconnect many of its home entertainment technologies. Another element, its MSN Music online music service that launched in test form last month, will officially go live Tuesday.