Building on its early-mover advantage, Microsoft today unveiled plans for the second half of 2006 and beyond. Unlike rivals Sony and Nintendo, Microsoft has no new console to unveil this year at E3, so the buzz was muted, and the presentation lacked the lead-story punch of the Sony PlayStation 3 and the Nintendo Wii. Instead, Microsoft used a highly choreographed event at the Chinese Theater in downtown L.A. to build on the Xbox 360's strong performance in its first six months.

One of the main thrusts of the Microsoft presentation was the Xbox 360's sales numbers around the world. Hampered by product shortages and a largely indifferent Japanese audience, the company nevertheless put a positive spin on the stats, showing that the system hit 5 million in sales faster than any other game console and even faster than the ubiquitous iPod.

To take attention away from the PS3 and Wii, Microsoft instead focused on exclusive titles for the Xbox 360, including Gears of War, a third-person action title that looked fantastic in a live demo. Other exclusives included Viva Pinata, Dead Rising, and a sneak peek at Halo 3. Microsoft VP Peter Moore described these games as the "second wave of the next generation." Grand Theft Auto 4 was also teased, with the promise of a simultaneous PlayStation and Xbox 360 release on October 16, 2006.

Xbox Live Arcade got some love for new partnerships with companies such as Namco, Midway, and Sega, including an Xbox Live version of the addictive puzzle game Lumines.

Bill Gates made a surprise appearance, hawking DirectX 10 as well as Live Anywhere, which is an extension of the Xbox Live experience to the Windows Vista desktop, where your Xbox Live friends and MSN Messenger lists combine, offering the ability to communicate between platforms and, for some games, to play cross-platform.

Several accessories were announced, including a wireless steering wheel, a wireless headset, and an EyeToy-like camera accessory. Also announced was an external HD-DVD drive. The drive will be released by the end of 2006, but instead of offering a DVI or HDMI output, it routes its video output through the Xbox 360, limiting you to component video, which is not HDCP compliant and therefore subject to image constraint.

Article discussion: Microsoft shows off "second wave of next gen"