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I know I just blogged about this a few days back, but I really think that the battle shaping up between Sony and Microsoft for control of the digital home front is going to be fascinating.

USA Today has a great roundup of the coming battle between the operating system (Microsoft’s Xenon) and chips (Sony’s Cell).

Another interesting lesson is this: Sony beat Microsoft out of the box in 2001, and promptly stomped the competition in terms of install base (a loss leader for companies, but important to recap money on games, and in the future, online play). So, Microsoft is fully expected to release its Xbox 360 this Christmas holiday season, potentially a full year before Sony.

That could be a huge mistake, particularly if there is no backwards compatibility – or if there are software problems. If not, though, MS could take over the market lead, primarily because it now has John Madden Football on its roster (along with Halo). Plus, MS has the most robust online game play (which generates revenues).

Of course, if there are major flaws with the system, Gates could be shooting himself in the foot by trying to beat Sony – the 900-lb gorilla – to the punch.

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