XBOX-HQ.COM - Microsoft at Work on Next Xbox

Microsoft has lately been active in recruiting staff to work on gaming hardware, although Gates declined to talk in much detail about the company's plans for the next generation of the Xbox, which is widely expected to come in 2005 or 2006. Market leader Sony Corp., which has dominated the current generation of consoles with its PlayStation 2, has been similarly circumspect about its plans for a PS3.

"In terms of the next round, hey it's a new game. We're not showing our hand and I don't think Sony's showing their hand," Gates said. "We're doing some very cool work but that's really all we say at this point."

Despite heavy competition, though, Gates said he was pleased with the market position of the money-losing Xbox, which was released in Nov. 2001 and has battled Nintendo Co. Ltd. for second place in the U.S. market. "Our goal in this generation was to be one of the leaders, and we feel like we've accomplished that very well," Gates said.