"Christmas was good, we feel like we had a very good holiday," Bach (Chief Xbox Officer) said. "I think it was one of those holidays you would describe as solid."

Bach claimed Microsoft's Xbox outsold Nintendo's GameCube in the last two weeks of December, despite GameCube's lower price, $99 versus Xbox's $179. Nintendo's move to a $99 price spurred a boom in GameCube sales that brought it closer to second-place Xbox in terms of U.S. installed base of users.

Bach, declined to commit to a launch for highly touted "Halo 2." Most expectations have been for the new game to come out in early April or thereabouts.

"We're going to ship it when it's ready," Bach said. "That might be the first half of 2004, it might not. You have to be careful with franchises like this."

FEW DETAILS ON XBOX 2:
Most expect market leader Sony Corp., as well as Microsoft and Nintendo, to bring out new consoles in 2005 or 2006.

Sony's PlayStation 2 had a one-year head start on the Xbox and GameCube, an advantage that has proved insurmountable, in terms of installed base and market share. Microsoft has of late been actively hiring engineers for its development efforts. "Really, the imperative is to not give anyone a head start," Bach said. He declined to offer further details on Microsoft's announced partnership with International Business Machines Corp. or to discuss issues like whether or not the next Xbox would contain a hard drive, as the current unit does. Many analysts have cited the hard drive as a key cost of the money-losing console. He also said it was unlikely Microsoft would make any major hardware upgrades to the Xbox before the current business cycle ends, as Sony has done with PS2. "They do their tuning with hardware, we do our tuning with software," he said.