Forget new hardware "The 'next generation' will be defined by software and services, not hardware", so says Microsoft's inestimable double-talker^*, Shane Kim. Given that Microsoft styles itself as a 'software and services' company, this is useful for Shane.

But what is he talking about here? "It's less about competing with Sony and Nintendo, and more about breaking down the barriers to the industry..."

A drinks party maybe? A sleep-over? It's something that isn't competing with Sony or Nintendo? A charity fun-run? No, it's Project Natal.

That's right, Shane is leading us to believe that Microsoft's effectively next Xbox is not competing with his major competitors.

Let's let Shane finish his quote from an interview with Kevin Ohannessian.

"...breaking down the barriers to the industry and inviting the hundreds of millions of people who don't participate in what we do to come enjoy what Xbox 360 and Xbox Live have to offer. I've been lucky enough to be here for the launch of Xbox 360, Halo 2, and Halo 3, and this is going to be just as big in terms of consumer excitement, importance to the industry, and certainly importance to Microsoft."

In short, yes, it is competing.

^{Microsoft's VP of Strategy and Business Development for Interactive Entertainment}