Gates likes 360's chances vs. Sony

Corporate hoopla and boasting should always be taken with a grain of salt. But when such speak comes from the richest man in the world, it comes with the credulity of 46.5 billion convincing dollars.

Microsoft chairman Bill Gates believes that the next-generation Xbox, referred to as the Xbox 360 or by its code name, Xenon, will launch his company into the leading position in the gaming industry. The console, which is expected to be released later this year, would have to have some serious impact to dethrone gaming's current top dog, Sony.

"Our goal in the last generation was to be in the game," Gates told reporters at a meeting of the Society of American Business Editors and Writers. "We came out of this round a strong number two."

The next Xbox is rumored to have standard wireless controllers, a detachable hard drive for storing various forms of media, and a high-powered processor that will deliver incredibly sharp graphics. With a recent deal with Samsung, one of Sony's rivals in the electronics market, Gates is hoping that the Xbox 360 will usher in the high-definition era into homes across the world. While details are still trickling in about the next Xbox, the state of Sony's PlayStation 3, expected in 2006, still remain under wraps.

Word on the Street is some analysts don't see the launch of Microsoft's console as the beginning of the company's reign as king of the industry. Michael Pachter, analyst at Wedbush Morgan Securities, doesn't see the next generation really kicking into high gear until Sony's contribution hits the market.

"We believe that market perception will cause entertainment software stocks to fluctuate within a narrow range until there is better visibility into software demand," says Pachter. "We think that many investors have misinterpreted the launch of the Xbox 360 as the beginning of the next generation, and expect rapid sales growth in 2006. In contrast, we expect the launch of Sony's PS3 (expected in late 2006) to mark the beginning of the next cycle, and think that rapid sales growth will not materialize until 2007."

Gamers will get their first peek at the new Xbox on May 12, when a special unveiling of the machine airs on MTV.

"What we've got in this [next round], at some significant financial cost, was the right to play again with great credibility," Gates said. "So now people are looking at the two companies [Microsoft and Sony] at a pretty much equal basis."

Toppling Sony as the leader in the market would be quite astonishing for Microsoft, who only joined the fray in 2001 with the current-generation Xbox. Sony, on the other hand, released the PlayStation 2, the current market champ, in 2000, and the PlayStation was released in 1995.