Does the fact that Sony didn' t announce a price cut for the PS3 at the Tokyo Games Show last week play into your hands?

Well, what they announce at TGS and what they decide to do in any given market in time are not necessarily directly aligned, I think. But Sony will be doing things between now and Christmas I' m sure, they can' t afford not to really, given the way that that particular business is going for them at the moment.

I' m sure Sony will react, but I don' t spend a lot of time thinking about those guys - I' ve got too many opportunities of my own to figure out, how we reap them, Halo etc.

But I think one of the disappointing/interesting things I heard from them at the Tokyo Games Show was that they just delayed the [Home] online service delivery again. That' s more interesting, because I think they underestimated how challenging it is to deliver this sort of service, and to deliver the elements of the service that consumers really want.

We' ve been working on it for five or six years now, and we' ve learned a lot through that process in order to deliver over 7 million people on Live right now.

So in some ways that was disappointing to hear because they still haven' t figured that out. It would be good to see the reality versus what they had on the blueprints - what they wanted to deliver against what they can actually deliver, because I know they generated a lot of interest based on what they said last year.

Live has been one of the success stories for the Xbox?

One of many…[laughs] But yes, Live was a defining difference arguably for the original Xbox, and I think with the Xbox 360 it' s just accelerated way beyond what we thought it would do, both in terms of the number of people playing and interacting on Live, but also the extent to which people are transacting on Live and getting involved with the different elements of the service.

It' s just blown our minds. Last year I had to change my budget literally every month to try to keep up with the trends that were happening because we didn' t accurately forecast the phenomenal take-up of some of the Arcade games, downloadable content, expandable maps on Call of Duty, and all the rest of it.

It has been phenomenal, and it' s just getting better. We' ve got Marketplace coming in the UK towards the end of the year, and that just takes that whole entertainment experience to that next point - and we' re just going to keep building that. It is a true asset for us.

Working with companies like the BBC must help with the Marketplace content?

We' re working with a lot of content providers, most of which we haven' t announced yet. It' s going to be a ramped process, putting content on to that.

When we launched in the US, the thing we learned is that it' s important to make sure we give consumers a great service rather than necessarily try to meet every demand on day one. That' s what we' re focusing on at the moment, we' re going to try to get some great content when we launch, and then we' re going to keep building and building and building.

That' s been our success with Live - we were pretty single-minded on Live about certain aspects that we wanted to deliver, before everything everybody else was asking for. I' ve been asked for Messenger on Live for six years, and it' s important to have that sort of feature on, but to begin with the most important thing was to give people great gameplay, make Gamertags a core essence, and make it very easy for them to go between games.

And we' ll do the same with Marketplace, we’ll concentrate on just introducing some good core content to begin with and then we' ll broaden out as time goes by.

Before the Xbox 360 launched much was said about microtransactions, but has the success of Achievements surprised you?

There are certain aspects that I know J Allard, when he was driving the design of Live, he was very passionate about Gamertags and Achievements. Those were the two things that whenever he came and chatted with me about where he was going with it, how he was thinking about it, he felt that those were the core elements for the gamer - those would be the people that would want to go online first and interact with other gamers around the world.

And he was absolutely spot-on. We have seen that grow enormously, and we now see it being extended, with people playing with their web identities, and web identities as a topic is very happening now - with lots of web presence, companies are building on top of those sorts of ideas.

I do think it was a great innovation, I do think it was thought-leading, and I do think that it is something that all of our competitors, and anyone who wants to be successful in the online arena, they have to think about how they deliver those sorts of experiences going forward.

The other notable announcement by Sony at TGS was the rumble-enabled Sixaxis. Do you think the original Sixaxis was flawed from the start?

I don' t know, I think when I went to E3 two years ago, and they were showing a lot of their first PS3 stuff there, it felt to me like they' d rushed a lot of things out because they felt the momentum on 360 was growing at a rapid rate, and they felt they had to come out with something early.

Now, what they chose to cut, or add, or take away from the product, or just take a punt on I don' t know - I don' t live in the Sony world. But I think it' s fair to say that over the last 12 months or so, it' s becoming more and more apparent probably to the market, and Sony are a bright bunch so they' ll understand this, but there are certain aspects in the way that they' re offering the product out that aren' t resonating enough, or perhaps they' ve inbuilt too much cost in things. And maybe relied on innovation in areas where people didn' t really understand what the innovation was for, that it didn' t really add anything.

Perhaps where Nintendo really did a very clever thing, they went for quite simple innovation, but it was aligned to where certain broad-range consumers' demand was. That' s always the tricky thing with technology - not finding out what' s technically possible, but what technology consumers will actually want and desire.

Lots of things are possible in the technology world - it doesn' t mean they are saleable, and the secret to great companies is figuring out what technology is saleable, and delivering it in a high-quality, great way. That' s what I think all of us in this business have to concentrate on.

But we' ll see where they go - as I say, I don' t spend enormous amounts of time thinking about what their technical challenges and opportunities are. I know they' ll be spending some late nights, probably.

Japan' s always been a difficult territory for you to break into, but there' s a blossoming opportunity in the rest of Asia now it seems - what are your thoughts on those regions?

Depending on what you classify as Asia, perhaps the emerging economies of China and India and places like that, rather than the more established gaming economies like Japan, there obviously is enormous potential there.

There' s also a wealth of barriers to being successful quickly there. The obvious ones are pricing, content, piracy issues and so on. So Asia will have to be a multi-point strategy for any company, I don' t think you can deliver one basket of products, however you want to define that, and services to Japan, and then think it will just flow across Asia.

It won' t work like that. You' ve got to figure out, pretty much, for China how do you work and deal in that market, in India how do you work and deal in that market? Korea is a very online-centric, PC café-type economy. Broadband rates in some of these countries are way above what we have here, so the opportunity for a different type of gaming experience there is open.

In some ways it opens an enormous amount of opportunities for all of the companies, be they platform companies or software companies, but it does challenge us to think about business models in a different way.

A company' s Nirvana is where they can make something once and sell it everywhere. The world is changing very rapidly and we have to now be much more sophisticated in building things fairly uniquely in certain parts of the world, and deliver them fairly uniquely. The delivery mechanisms as well as the products themselves need to be tailored.

It' s probably that complexity, and people' s ability to manage that complexity, that' s going to define how quickly any particular company can be successful in those markets.

Having said that, the traditional things such as content and services will still be a pervasive force, especially in the gaming world. I know at TGS we announced some fantastic Japanese content, Ninja Gaiden 2 seemed to go down fairly well, and we' re getting a lot more support now from the Japanese market, and Japanese publishers, than we ever have before.

Ok, we haven' t been very successful in Japan so far, I think we' ve been fairly open about that. But we' ve also said that it' s just something we' re not going to give up on. Whether we can crack it in 12 months, 18 months, 24 months, 4 years, 6 years - it' s just something we will keep going at because it is a point of learning for some of those other markets.

Although we won' t use the same strategies in those other markets, it is helping us understand how to be different as a company. It' s the challenge of the next decade, in my humble opinion, for large organisations - how do you deliver that unique service, while living in a corporate world that' s trying to build efficiency, because everything' s getting more expensive and more difficult. Hence the growth of web-based companies and how they' ve been successful - because they' ve been able to do that.

So - it' s a massive opportunity, we' ve all got a lot of complexity to get through to grasp that opportunity, and we just keep working very hard at it.