BIZ: There have been a number of rumors out there about Microsoft possibly introducing revamped 360 hardware. Is MS going to issue updated 360 hardware with HDMI, a bigger HDD, quieter DVD drive or other features?
SK: Nothing to announce yet today, but what I will say is that we're always look at how we can improve the entire experience, whether it's in the hardware or in the services and software itself. I think it's a lot easier to address the hardware changes that customers would want and that we would want as well than it is to actually deliver the software and service innovations that we have, particularly on Xbox Live. So I look at that as saying, "Of course we're going to listen to customers." When we launched Xbox Live Video Marketplace last year, which I think was a great innovation, it's been super successful and very popular for us on Xbox Live. Of course, customers are saying, "Hey, it'd be nice if we had a larger hard drive with all of this content that we've already been downloading on top of Video Marketplace and now you're adding to it." So that's just one example of where, "Ok, gosh we've heard that people would like a larger hard drive and things like that." Those are things that we're always looking at, and like I said, that stuff is much easier to add to than to think about all of the software innovations that our competitors would have to do to be comparable to what we do.
BIZ: It's easier to add on the one hand, but if you decide to implement new hardware, new features... what does that do to the ten million or so people that already have the system?
SK: With any kind of hardware SKU transition like that, those are the kind of issues that you have to mange through and it's not just customers, it's also retailers that have inventories of existing systems and things like that. You just have to work with those people really closely on working through those issues. There are a lot of different ways to make sure that transition goes well for customers and some of it may be that... and I'm just making this stuff up, but some of these new features might start coming at a higher price point. Some of it also is just the inevitability of the evolution of technology and hardware as well. I mean, I bought a PC a year ago and now I'm starting to wish I had more RAM, a faster CPU, so I think there is some inevitability there as well. What we have to do is we have to respect that if we do add greater capabilities from a hardware standpoint that we also manage that transition well from a software standpoint, and that we make sure that, even if you've got an "older Xbox 360" that all of that stuff interoperates well and that's where I think we have an advantage as a software company.
