It is hard to imagine Microsoft admitting second place to anyone, but in the console wars their powerful Xbox still has a great deal of ground to gain before it can claim the crown from Sony.
By Neil McGreevey
BBC Northern Ireland
But the PlayStation's supremacy is being challenged aggressively and Microsoft officials are confident they will succeed in the long run.
Initial cost of the box was too high, Microsoft admits
For now Michel Cassius, Director of Xbox in Europe, is keen to stress what Xbox has achieved so far.
"What we promised last year, we have delivered on this year, and what is there is not only for the core gamer - games, music, DVD, Karaoke - these are just an illustration of what Xbox is all about," he said.
But it was not always plain sailing. By Microsoft standards, the Xbox launch was an unimpressive affair, thanks to wildly overpriced hardware.
"The pricing at the start was a mistake, but we learned quickly," admitted Mr Cassius.
"One thing Microsoft does well is listen. We learned quickly and then moved on," he told BBC News Online.
"At the end of the day it's the best console on the market. It has the best functionality, the best graphics, it has DVD, a hard drive and everything a gamer could want."
"We have established Xbox as a brand," he said.
But Microsoft has still to make an impact when it comes to games.
Few Xbox-only titles, aside from Halo, are considered must-haves by avid gamers.
As part of its drive for exclusives, the company famously waved the bulging Microsoft wallet at Nintendo darlings, Rare, who are now developing games for the Xbox.
"The first thing Nintendo said when we acquired Rare was, 'we don't mind' - they were dismissive about it. Rare is a fantastic company, and they are bringing some very hot properties to Xbox," said Mr Cassius.
When it comes to online gaming, Microsoft has a zeal that far outstrips its rivals, Nintendo and Sony.
"Of course a console needs to be online," insisted Mr Cassius. "Soon most games will be online.
"The things you can do now, like online chatting, are not what we mean. It is all about blending games with the social aspect of bringing people together."
"The core gamer is getting older. There is a broadening of the market. My nine-year-old daughter is now asking me, 'When will there be happy games?'"
"People don't just want fighting and shooting games. This is why we have games like Rare's Grabbed by the Ghoulies and the karaoke device."
The karaoke device is a new addition. The Xbox Music Mixer includes a microphone that allows gamers to sing along to their favourite tunes.
It also lets them download photos, movies and music from PC to the Xbox and set slideshows to the music.
Titles like Halo 2 will help to win over gamers
However, the console war will be won with software, not devices. With id Software's incredible Doom III heading to Xbox, along with Halo 2, no-one can say Microsoft is neglecting the games.
So when asked if he foresees a time when Sony is chasing Xbox for the number one position, Mr Cassius is very clear.
"The only question is when. We are out to lead this market; we are not shy about that.
"Will we lead this generation? No. It will be the next generation. That is our ambition."
While Sony caters to the broadest possible market and Nintendo has the 'games for gamers' sector sewn-up, Xbox is pursuing what Microsoft calls a digital entertainment lifestyle - a vision of connected gamers with connected lives.
The software giant is slowly laying the groundwork for total market dominance in the coming years.