Bundling does seem to be a good way of getting the value message across to consumers - that will carry on this Christmas and the Christmas after that and the Christmas after that.
It's a very competitive market and this is one of the ways you can maintain your sales to the gamers.
A lot of PS2 owners have machines which are three or four years old now and they'll be looking for a new console. If the value proposition on Xbox is good enough, they'll buy one to go alongside their PS2.
Are you wary of dropping below 100 for a standalone unit, in that the price may devalue the consumer's perception of the console?
Teversham: Looking at history, lowering the price opens up news markets of price sensitive people. If you look back at PSone, when it went to 99 the whole market exploded and it sold a large number of units. I don't think it devalues the console, I think it opens up a larger market of people.
Do you have plans for a further price cut in the short term?
Teversham: We're not planning to reduce the price at all at the moment; the sales are good and we've got some great games coming out like Splinter Cell: Pandora Tomorrow, Rallisport Challenge 2 and Ninja Gaiden.
We're not planning anything and we believe our portfolio over the next three to four months is extremely strong.
There's a huge amount of talk about Xbox 2's potential appearance at GDC and then at E3 - while we don't expect you to discuss details of that now, what advantage do you feel you have by being ahead of the competition this time around, in terms of next-gen positioning?
Teversham: The belief is that we've now got momentum: we've got relationships with third-party publishers, with retailers, with our consumers. People know us, know what we stand for and like what they see; having that momentum means it will be easier to open doors to talk to people.
As for timing, we want to make sure we are launching at the latest at the same time as the competition, and to ensure they don't get a head start on us - that's where we are today.
Would you agree with the analysts report of last week from the Informa Media Group, which predicted that by 2010, PS3 will have shifted 30 million units in Europe compared to 10 million Xbox 2s?
Teversham: I don't know where they're getting their information from, but analysts can sometimes be wrong.
Finally, what will Microsoft's Xbox 'message' be at E3 2004?
Teversham: The message will be: the momentum continues. We're going to have amazing content, the games are getting even better, Live is a fantastic way to play games, plus we're going to have hundreds more titles.
The key message is the momentum message: we are now the number two console in the US and Europe, we're really pleased to be that, and now we're coming into a new phase we want even more games out there. That's what it will be about.
I'm sure you'll play some games you've never seen before [at E3], we'll announce some games you've never heard of and there'll be a few surprises along the way.