If you're a CES follower, you probably already know about the Microsoft/AT&T deal to turn the Xbox 360 into a television set-top box.  The deal will allow telephone companies to serve up video programming through a connected Xbox 360 in an attempt to compete with cable TV.  With the proliferation of VoIP, many of the lines between cable, Internet, and telephone services have begun to blur.  Allowing telephone companies to offer video programming through an Xbox 360 will even further blur those lines.

The Mercury News caught up with Bill Gates after his keynote speech at CES and got a little insight into the mind of the Microsoft co-founder and the direction his company is taking.

Among other things, Gates talked about the company's strategy with the Xbox.  He said Microsoft's Xbox strategy was working "perfectly" and that original Xbox was Microsoft's "learning curve" experience with gaming systems.  Now the industry-leading gaming system in terms of sales, the Xbox 360 was built using knowledge gleaned during that initial learning process.  In fact, the current Xbox 360 won't have to be modified at all to take advantage of the set-top services announced at the show.  It was built from day one with a future-looking design and capability.

When asked about the competition between Windows Media Center and Xbox 360 Live, Gates told the Mercury News that it was a non-issue.  As long as consumers were comparing "Microsoft-Microsoft" products, he's a happy camper.  With the mention of Apple TV and Apple's forays into consumer electronics, Gates again appeared unconcerned.  According to Gates, the companies have different philosophies:  Apple doesn't like playing with others while Microsoft loves to play with everyone.

But that wasn't the end of the Apple innuendos.  When asked about the Zune, Gates talked about the approach the company was taking to the music player market.  Like with the original Xbox, the first Zune is Microsoft's learning product.  It's the product that the company uses to enter the market and become a player.  And I'm sure Gates hopes the Zune will play itself out in a similar fashion to the Xbox product line.

As I've said before, Microsoft is a long-haul company.  They don't release a product and expect it to be perfect.  They don't care if the first Zune is an utter failure because they're learning from the experience.  And I've talked about the first Xbox before, too.  Even when the things were catching fire, Microsoft didn't care (from a development standpoint… I'm sure they cared about the fire-starting itself).  They took what they learned, made enhancements, and now they all but dominate the game console market.

I see the same "don't care" mentality being expressed by Gates here in relation to the Zune.  I don't see Microsoft being deterred by lackluster sales or bad press or any of the other happenings that often cause other companies to quit.  They'll continue to enhance and improve until they own the market.  The same thing can be said about Windows Live.  They may be loosing ground now.  But I don't think we can count Microsoft out of the search market yet, either.  They're in it for the long haul.

And that long haul strategy has worked out for them time and again.