Microsoft will launch its Xbox Live online game-playing service on 15 November - but only in the US. No date has been announced for any European launch.
Microsoft will sell a $50 Xbox Live starter kit that includes a headset microphone, a one-year subscription to the service, and software that allows the Xbox to tap into an existing broadband internet connection.
The company said it will spend $2bn over the next few years to build out the Xbox Live network and develop the next generation of its game console.
However, Microsoft is still two months behind its rival, Sony, which will begin selling a network adapter for allowing the PS2 to tap into a broadband or dial-up internet connection for online game play next week.
Besides Sony's support for dial-up connections, the main difference between the two companies' approaches is that Xbox Live will be a closed network, with Xbox gamers able to connect to each other only through the Microsoft-maintained system.
The system will include games from Microsoft and third-party publishers.
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