For the past few years, Microsoft Corp. (MSFT ) has vowed not to give Sony Corp. (SNE ) a head start in the next generation of video game consoles. It's a lesson Microsoft learned the hard way. Sony's PlayStation 2 had a 20-month jump on Microsoft's Xbox, which launched in November, 2001, and rode that lead to a 69% market share. Microsoft started work on the next version of Xbox right after the original shipped, to be ready when the next console cycle began. Said Microsoft's Xbox boss, Robert J. Bach, in a recent interview: "We'll be there when Sony is there."

Turns out he may have been underplaying his hand. BusinessWeek has learned that Microsoft is planning to launch the next version of Xbox, code-named Xenon, in time for the holiday season in 2005, shaving a year off the typical five-year console life cycle. And while a Sony partner says the Japanese company is aiming for the same launch window, game developers say Sony hasn't yet nailed down the key technical details of its next PlayStation. Without that data, developers can't begin coming up with games, which typically takes 18 months.