Microsoft Chairman Bill Gates has unveiled a video games system that is expected to pitch the Seattle company into a head-to-head battle with Sony, which dominates the $20bn-a-year console market.

We're getting to know the gaming community and we're really pleased with the support they're offering us

Bill Gates

The Xbox system - due on the market later this year - was unveiled at the Consumer Electronics Show in Las Vegas.

Microsoft's multi-million dollar entry into the video games console arena is its answer to Sony's market leader Playstation II.

In a keynote speech, Mr Gates also previewed plans for an integrated computing future - a personal computer that will tie together all audio, video and information needs.

Sleek, black box

"I'm talking about an extended PC - a PC that talks to the TV set-top box, talks to the music player devices, co-ordinates with other PCs," he said.

Sony's Playstation II was difficult to get hold of over the Christmas period

The Xbox features four game controller ports, a DVD tray and may allow players to connect voice-activated headsets.

It has an 'X' moulded into the top of a sleek black box and a circular lime green logo fixed in the X's centre.

Microsoft claims it can deliver three times the graphics performance of its rivals. The software company's chief described it as the "future of video gaming".

"With its breakthrough technology and incredible graphics capabilities, Xbox will set the standard in gaming for years to come," Mr Gates said.

What's in the box?

733MHz CPU 250MHz custom-built graphics processor 64Mb memory 4x DVD 8Gb hard disk 64 audio channels

"It enables game designers to create a whole new world of game-playing experiences that will captivate the imagination and competitive spirit of gamers like no other console."

Microsoft says more than 200 games companies around the world are creating Xbox games for the launch.

Professional wrestler The Rock appeared on stage alongside Mr Gates to testify to Xbox's ability to render lifelike graphics in the World Wrestling Federation's game currently being developed for the console.

The Xbox console is scheduled to go on sale in the United States and Japan later this year, and in Europe early in 2002. There were no details about the likely price.

Microsoft has made a couple of previous attempts at breaking into the consumer market, but with only limited success. It has generally preferred to supply its software and leave Sony, Nintendo and Sega to fight it out.