Some interesting tidbits in bold:
"What will the year of high-definition be?" Gates asked, rhetorically. He then answered the question by saying that it would be tempting to think of it as "this year, because we’re going to ship this next Xbox."
On how the next Xbox, code-named Xenon, will be similar in some respects to the company’s Media Center PC software: "If you’re used that menu, when you use this Xenon, you’ll see a menu a lot like that, that lets you get photos, TV, music and all those different things."
From today’s engadget interview with Gates:
And so, for example, Xenon is more powerful than any next-generation set-top box and it can be used as a set-top box, but obviously it can do a lot more than that; you can run the entertainment and other software there.
So the high-end scenario for us is you’ve got Media Center PC, that’s where your state is, but then you’ve got your Xenon out that are connecting up to that. Xenon itself will have some neat capabilities, but we’re in pre-introduction here, and that group is brilliant about the unveiling….
It won’t be a Media Center PC, so there’s some things you won’t be able to do. You’ll be able to do a lot of media things including storing music, playing music, connect up your player.