Microsoft sees Xbox 360 in driver's seat

"Our view is basically we've got a Ferrari, they've got a Ferrari," Gates said in a question-and-answer session at Thursday's meeting with financial analysts. "Our Ferrari is leaving the starting line substantially before their Ferrari is, and in most races that's a very nice thing."

Microsoft's Xbox 360 is due to go on sale this holiday season in the United States, Europe and Japan. Meanwhile, Sony's PlayStation 3, with its powerful Cell processor, is slated to arrive next spring.

Gates noted that the last time around Microsoft was beaten to the punch and said overall sales suffered as a result.

"We tried it the other way last time," Gates said.

Robbie Bach, the Microsoft senior vice president who heads up the Xbox, said he doesn't see Sony having a demonstrable advantage with its hardware.

"They're going to be a little faster in a few areas, we're going to be a little faster in a few areas," Bach said. "The net result from a hardware perspective is going to be kind of a toss-up."

A Sony representative was not immediately available for comment.

Bach said that Microsoft should also benefit from greater developer support this time around, saying the company's easy developer tools are its "secret sauce." Developers have expressed some concern about the escalating costs of developing console video games.

Bach said there are 160 games in development for the Xbox 360, with 25 to 40 titles expected to be released this year, including around 15 at launch.

The analysts got to see a demo of one of those titles in the works--"Project Gotham Racing 3," which is being published by Microsoft.

However, the analysts did not get to drive the console for themselves. The one Xbox 360 console on display was underneath a thick plastic display case, a disappointment to more than a few in the Wall Street crowd.