Microsoft: Fighting back

...work with the PC, and we'll work with our partners on that in a variety of ways, including where it's appropriate for reference designs.

But we do need to simplify the experiences. There's probably more we need to do with our partners in terms of the way things get presented, and peripherals get presented, and packaged and presented in stores.

You started that with PlaysForSure?
Ballmer: We started it. We've got a lot of work to do.

One of the areas that you've talked about a lot in the consumer side is Xbox, and really there is this kind of window of opportunity. You guys are out with the next-generation console; Sony is not going to be out for a while. The availability at launch wasn't necessarily what you wanted. What are you guys going to do, and what would you like to accomplish by the time Sony gets to the market?
Gates: Our availability was just great.

Ballmer: It's pretty good. We knew we were going to be short.

Gates: We are shipping faster than any videogame has ever shipped. The thing is just hot, and I spent over 100 hours playing with it over Christmas. It's fantastic. And it really draws you in because you get these awards, you meet people, you get into the contests. It's something.

Ballmer: It's accomplishing a lot of what we'd hoped to in terms of appealing to a broader demographic. We've got to make a bunch. We knew we would be in short supply, but we also knew we could build a lot. We've built a lot. We've sold a lot. We've got to keep building more, and as Bill says, we're on target for our roughly five million by the end of the financial year. I feel like everything is great guns on Xbox. I mean, yeah, every one we can make we're going to ship, but everything is great guns. I couldn't have laid out a much better place to be than where we are today.

How big a dent do you think you've put in Sony? ?
Gates: We know what it's like to go second. We've tried that. And that was last time. Last time was very different in that, if I bought a PS2 and you bought an Xbox, we'd go to your house and play PS2, we'd go to my house and play Xbox.

So it works, when it becomes this "Live" thing, that you're accumulating your achievements and all that, and anybody can play with anybody. [If] I bought an Xbox, when you go to buy a machine — whether it's 2006, 2007 — if you want to play with me in Live, which is what the thing is all about, then you need to buy that same machine.

So we've got that leading-edge group, most of whom won't buy two machines — some will, but they're telling their friends, look, connect up to me, and that's done with Xbox. So going first was more important in this generation than in any generation there has ever been.

Ballmer: The Live advantage is... there's no Sony announcement for a Live equivalent type deal. We had, if anything, a cost disadvantage last generation. If anything, depending on what they do with [Blu-Ray disc support], we're not going to have a cost disadvantage this time.

Gates: Have you seen the basketball game? I think it's great.

Ballmer: Oh, have I seen it? Shall we say it's quite hot in the Ballmer house. My son comes up to me the other night, "Dad, the guys start perspiring in a few minutes... just the way they're supposed to; that is really awesome, Dad." I've got three boys, 13 on down, and unlike Xbox 1, my wife thinks it's a good addition to the house.