UK senior regional director for MS has been speaking to the times about the arrival of PS3 across Europe last Friday.
"In the technology and gaming there's really little in the PS3 where I can say, 'Gosh, I wish we had that'," he told the Times online. "The biggest threat that Sony has for us is the brand that's been established around it."
While Thompson admitted that PS3's graphics would give 360 a run for its money, he said that Microsoft is leading the race in the online department: "More and more we're seeing that the online experience is a really important factor. Sony has come up with an online world that seems to let you do just about everything except gaming.
"It's two, three years ahead of the market. People won't want to replace their entire DVD collections, and they'll get a better resolution with a standard DVD on an Xbox than a PS3. It's nowhere near the importance of the format war between VHS and DVD".