Microsoft is the only console maker so far to launch a paid subscription service. And we expect the release of the Xbox 360 and additions to its subscription service to accelerate Microsoft to just under 50% annual subscriber growth between 2004 and 2009.

Microsoft is the only console maker so far to launch a paid subscription service.

XBox appeals to the oldest demographic of the three consoles. Generally, Nintendo appeals to a much younger audience. Sony has covered the gamut from pre-teens to people in their 30s. Microsoft is trying to make their appeal to a younger demographic because there is a lot of money to be made among younger players.

Camera phones have been the largest single application for image sensors since 2003. And what was once a high-end product for the Japanese market has become a worldwide phenomenon.

Xbox 360 is a new product with new technology, so the slow start is understandable, but next Christmas the Xbox is not going to be there by itself. Newer consoles from Sony and Nintendo will also be there.

Microsoft has been most aggressive with Xbox Live, connecting the Xbox 360 to the Internet for game play and allowing users to download content, either paid or free. This is really just another step in that process to make what was a video game console into more of a living room entertainment center.