Xbox 360 Shifts Into High-Definition

Microsoft will offer an improved DVD accessory for its latest game console.
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Updated from 9:30 p.m. EST

LAS VEGAS --

Microsoft

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plans to offer a high-definition DVD player for its Xbox 360 console later this year, company chairman Bill Gates announced in his keynote address at the Consumer Electronics Show here Wednesday night.

The player, which Microsoft will offer as an external accessory for the Xbox 360, will play discs formatted in the HD-DVD standard, according to Peter Moore, who heads the company's Xbox business. The software giant has not yet set a release date for the device or a price for it.

Additionally, consumers will be able to stream high-definition movies from computers running Microsoft's Media Center PC operating system to the Xbox 360 over their home networks, Moore said.

Microsoft has touted the Xbox 360 as the first truly high-definition game console, because of its ability to display and play games in the 720p video standard. But the company included only a standard-definition DVD player in the device, not one that will play new higher-resolution DVDs.

Sony

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, which plans to release its rival PlayStation 3 console this spring, has made much of the difference. To the consumer, "high definition" implies movies and video content, not games, Sony has argued. Because the PlayStation 3 will have built into it a player able to read discs formatted in the Blu-ray DVD standard, it will be the first real high-definition game system, Sony has said.

Moore said Microsoft does not have any plans yet to integrate a high-definition DVD player into the Xbox 360.

The company launched the Xbox 360 in November, and Microsoft said it is on track to meet its goal of shipping 4.5 million to 5.5 million Xbox 360 units by the end of its fiscal year in March.

There have been widespread reports that shipments of the Xbox 360 were disappointing over the holiday season, helping to dampen sales of video-game software. Microsoft wouldn't say how many Xbox 360 units Microsoft had shipped to date or whether the company was on track to meet its goal of 2.75 million to 3 million units within the first 90 days of launch.

Instead, Microsoft said it is "tracking very well" with regard to its 90-day goal.

Gates also announced that Microsoft, as part of an effort to increase supply of Xbox 360s, has lined up

Celestica

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to be the third manufacturer for the device. Celestica will be producing the units by February.

Gates also touted Microsoft's success in getting Xbox 360 buyers to purchase multiple games for the device and to sign up for the company's online gaming service. On average, Xbox 360 purchasers are buying about four games along with the device -- far exceeding the so-called attach rate for previous consoles, Microsoft has said. Additionally, nearly 50% of Xbox 360 users have signed up for Xbox Live, the online gaming service. In contrast, just 10% of original Xbox owners have signed up for Xbox Live.

However, Microsoft is offering a free level of online service for the Xbox 360, something it didn't offer with the original Xbox.