Microsoft planned Xbox 2 for Xmas 2004

Internal schedules at Microsoft as recently as last November called for the Xbox 2 to be launched in time for Christmas 2004, sources close to the company have revealed - and the firm is still thought to be considering a launch by mid-2005.

Sources at a number of key Xbox developers, who cannot be named for legal reasons, have confirmed that when the company originally revealed the outline specification for Xbox 2 late last year, the company surprised its partners by suggesting that the new hardware would be in shops for Christmas 2004.

The system has since slipped from that schedule - which also called for an unveiling of the specification at GDC, at the high-profile press conference which the company eventually used for the launch of the XNA development platform - but Microsoft apparently still has hopes to get the new console out in mid-2005, ahead of the Christmas 2005 release anticipated by most commentators.

"I think they underestimated how hard it was going to be to build a console that wasn't using PC architecture," one source familiar with the firm's console development efforts told us today. "But they're racing to get to the market as soon as possible - they really want to reverse the head start that Sony had last time."

A launch in mid-2005 would probably give Microsoft a full year's head-start on Sony's PS3, and possibly even more, as some commentators have suggested that Sony could allow the PS3 to slip further in order to allow the PlayStation Portable to hold the limelight for longer.

One consequence of Microsoft's eagerness to launch a next-generation console so soon is that the firm has allegedly encouraged developers to move to next generation development ahead of schedule. While few if any companies have moved their PS2 teams onto PS3 projects as yet, discussions with developers over the past week have revealed that quite a few are wrapping up work on the Xbox with their current projects and are moving on to Xbox 2 development imminently - or have done so already. It's not a universal trend by any means, as several companies are still planning to start new Xbox titles in the coming months, but it's certainly a different landscape from the thriving environment that is PlayStation 2 development.

Of Microsoft's internal big-name studios, it's seemingly planned that Halo 2 will be Bungie's last Xbox title before moving on to Xbox 2 development, while UK-based Rare is already working on Xbox 2 software - with the highly anticipated Perfect Dark follow-up apparently planned for the next-generation hardware. The firm's range of XSN Sports titles have also been cancelled in 2004 and will now appear in 2005 instead - quite possibly as early Xbox 2 titles, thus giving the new console a full range of sports games from the first stages of its lifespan.

This is a risky gamble for the company. If they can launch the Xbox 2 in mid-2005, they'll certainly have an impressive head-start and will have the only next generation platform on the market for at least six to nine months. However, Xbox users may feel unhappy with the short life-span of their console as the flow of original titles for the platform dries to a trickle in 2005 - and if no new console is forthcoming until late in the year, then 2005 begins to look very barren for Microsoft.