Microsoft Chairman and Chief Software Architect Bill Gates revealed that his company is considering licensing the software underlying its Xbox video game system to third parties. The move could lead to a dramatic increase in market share for the Xbox, which currently lags behind market leader Sony PlayStation 2 by a wide margin.

Microsoft confirmed Gates's statements, noting that the company is looking into licensing the basic software behind the Xbox. However, it wouldn't confirm that Gates was referring to the Xbox 360, which is the next-generation Xbox console that Microsoft will ship this year. Compared with the original Xbox, the Xbox 360 includes dramatically improved system software.

According to a Microsoft spokesperson, if Microsoft does license its Xbox system, the terms will be similar to those that the company now offers PC makers for Windows. Beyond that, everything is speculation. Many people suspect that Microsoft would like to see the software power set-top boxes that incorporate such things as DVD, digital video, digital music playback, and perhaps even rival video game systems.