Microsoft boss Bill Gates has outlined his vision for the next ‘digital decade’, announcing plans to add IPTV services to the next version of the Xbox.

Speaking at the Consumer Electronics Show (CES) in Las Vegas, Gates announced that Microsoft will combine the Xbox 360 gaming device with the Microsoft TV IPTV Edition software platform, which he says should be available by the end of 2007.

The move forms part of Microsoft’s plan to extend its influence into people’s living rooms.

Gates told Kotaku:

“The reason we got into Xbox was not just for gaming. It’s a general purpose computer.”

“We wouldn’t have done it if it was just a gaming device. We wouldn’t have gone into the category at all. It was strategically getting into the living room. This is not some big secret, Sony says the same things.”

With the new, IPTV enabled Xbox, Microsoft will aim to combine its current gaming and Xbox Live services with video on demand and recording capabilities. You can see some screenshots at this games site.

IPTV is now clearly gathering pace, with a number of companies now showing TV via broadband connections, including BT, Sky and Channel 4, with others due to follow suit. None of them will be able to offer the combination of IPTV and gaming though.

Gates also announced that Microsoft has shipped 10.4m Xbox 360 systems to date, while Xbox 360 users have downloaded more than 100m pieces of content through the service, including games, TV shows and films.