SEATTLE (Reuters) - The next generation of Microsoft Corp.'s Xbox gaming console, due to be unveiled later this month, will give the world's largest software maker a chance to overtake the leader in the gaming business, Sony Corp. , Microsoft Chairman Bill Gates said on Monday.

"Our goal in the last generation was to be in the game," Gates told reporters, "We came out of this round a strong number two."

Gates, speaking at a meeting of the Society of American Business Editors and Writers, said that the newest version of the Xbox, code-named Xenon, would have an array of features that will make the device a more versatile tool for games, music, video and pictures in the living room.

Gates also emphasized how Xenon would take advantage of the growing availability of televisions and content in high-definition (HD) format, which allows clearer pictures to be displayed on large, wide screens.

Microsoft is planning release details of its next generation Xbox on may 12 in an MTV special, ahead of a key gaming conference later this month where Sony is also expected to talk about its successor to the PlayStation 2, its current generation console and market leader.

"What we've got in this (next round), at some significant financial cost, was the right to play again with great credibility," Gates said. "So now people are looking at the two companies at a pretty much equal basis."

Asked if Microsoft would be able to beat Sony with Xenon, gates said that several top employees involved with Xenon had promised Microsoft Chief Executive Steve Ballmer that Xenon would beat Sony and that he welcomed that "competitive dynamic."

Redmond, Washington-based Microsoft jumped into the gaming console business in 2001 with the Xbox, spending more than $2 billion to develop and market the machine, which it expects to become a major source of profit and revenue.

Copyright © 2005 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in PC Magazine.