Q: The only worry is that Nintendo may have done a good enough box at a low price with the different controller. Maybe they might lead?

A: Sony has always been our most direct competitor. Nintendo of course is a competitor. But look at the resolution you get with a controlled experience like that. Say to yourself, how in terms of using a game for a long period of time, what kind of accuracy and capability do you want? Look at the classic Nintendo positioning. Look at the graphics. Look at Nintendo's execution in terms of online capability. We have this thing that nobody has ever seen before. When you say to your friend, hey let's play online, you say then you have to buy an Xbox. That's what 10 million people say. If you want to play online, get an Xbox. We're not standing still. Look at what you saw today connecting up the world to the Windows PC. Do you expect Nintendo to rev up a team to create cross-device gaming and tool kits to develop those things? Not very likely. We clearly think that Nintendo did some things right. This group Rare that we bought a few years ago really the gestalt of doing titles of a certain type that we didn't have on our box. Viva Pinata has been a huge success. In my household, everybody plays Viva Pinata.

Q: Do you think that with this generation of games, Sony is going to have anything that looks better than the Xbox 360's Halo 3 for the PlayStation 3?
A: No. They were going to have the Cell be the video processor. But they didn't know what they were doing. They said the Cell is the video processor. But they turned to Nvidia at the last minute, but Nvidia can't do embedded DRAM. Go look at the bandwidth problems. Go ask the guys running ... now. They took their year and burned it by not having a decent CPU strategy and then turning to Nvidia at the last minute. It's a very unusual thing. Those processors are isolated from each other. You are seeing great game developers. Things will get better on us and on them. We think they're get better on us. That is so close. We claim we're better. It doesn't matter. It's just like pointing at the Xbox 1. We were 20 percent better. But it didn't matter. We were a year late, didn't have the best games. We had this bigger box. We did have online. We didn't switch positions on that.

Q: Sony says they have an advantage in creating games at 1080p.
A: Go ask the game developers. 720p is great. We can do 1080p. But in systems with 512 megabytes of memory, there are trade-offs. 720p is great. These are 512 megabyte machines. They are not 4 gigabyte machines. 720p is fast.