At this week’s Consumer Electronics Show in Las Vegas, Bill Gates confirmed that Microsoft is working on a new Xbox video game console, expected for release in 2005 or 2006, according to Reuters. Gates didn’t spill many beans about the next iteration of the machine, but hinted that it would “keep pushing the boundaries“ to make the gaming system a hub for all kinds of digital entertainment. Later this year, the company will allow gamers to use Windows XP Media Center Edition to transform the Xbox into a more sophisticated digital video and audio player.

The subtext is loud and clear: Gates wants to use the Xbox to own the living room. But shouldn’t he really be touting the Xbox’s primary function: playing games? The reason the Xbox is lagging behind Sony’s Playstation 2 in sales is that the first party games, with the exception of Halo, have been more than disappointing. Why buy an Xbox when there are so many more games, good ones at that, available exclusively on the PS2? Halo 2, due later this year, is one answer, but no way is it enough.