Bill Gates has confirmed that the next generation Xbox widely believed to be called the Xbox 360 will launch by the end of the current year.

The announcement, came from Gates as he addressed the Society of American Business Editors and Writers.

"Our goal in the last generation was to be in the game," Gates told reporters, "We came out of this round a strong number two."

Gates also promised the new console currently code-named Xenon, would have an array of features that will make the device a more versatile tool for games, music, video and pictures in the living room fitting in with the Microsoft Media Center design and feel.

Microsoft is planning release details of its next generation Xbox on 12 May in an MTV special, ahead of E3 where Sony is expected to announce its plans for its next generation PlayStation - PS3.