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Labour leader cites Google founders' 2004 promise in which they said they would forgo short-term gains to do good things

Labour Leader Ed Miliband has said Google is "wrong" to avoid paying taxes on UK revenues, citing its founders' 2004 promise to to forgo short-term gains in order to do good things.

At an event hosted by the search giant near London, Miliband also pledged that a future Labour government would change laws unilaterally to stop "transfer pricing" by which companies such as Amazon shift profits between countries and to increase transparency about profits and revenues. Miliband called the system "crazy" and said he would also lead a crackdown on offshore tax havens.

He warned too that internet companies risked taking the same approach as banks had during the early part of the century, when their corporate culture meant they took a short-term approach which ignored wider effects.

Speaking at the company's annual "Big Tent" event, Miliband pointed to the letter written by founders Larry Page and Sergey Brin in 2004 in which they said they would sometimes ignore short-term interests in favour of the long term.

Miliband read out the passage, in which Page and Brin wrote: "Don't be evil. We believe strongly that in the long term, we will be better served – as shareholders and in all other ways – by a company that does good things for the world even if we forgo some short-term gains. This is an important aspect of our culture and is broadly shared within the company."

Referring to that, the Labour leader said: "I can't be the only person in this room who feels deeply disappointed that a great company like Google with great founding principles should be reduced to arguing that even though it employs thousands of people here in Britain, makes billions of pounds in revenue here in Britain, that it's fair that it should pay just a fraction of 1% of that in tax."

Miliband referred to comments by Google chairman Eric Schmidt, who has previously said that Google's tax arrangements – by which "sales" are begun in the UK but "completed" in Ireland, where it pays a small corporation tax rate – are "just capitalism".

Miliband retorted: "I'm sorry that Eric Schmidt isn't here this morning to hear me say this directly. When Google does great things I will praise you. But when Eric Schmidt says that its current approach to tax is just capitalism, I disagree. And when when Google goes to extraordinary lengths to avoid paying its taxes, I say it's wrong. And it's not just me that says it, it's Google's founding principles, and it's crystal clear from them."

He said that paying fair levels of taxes was important to support health, education and transport services, and was part of "responsible capitalism".

• Google
• Eric Schmidt
• Internet
• Ed Miliband
• Tax avoidance
• Corporate governance

When Google does great things for the world, I applaud. When it goes to extraordinary lengths to avoid paying its taxes, it's wrong

This is the prepared text of a speech delivered at Google's Big Tent event on the morning of Wednesday 22 May, 2013.

It is great to be here inside the Google Big Tent.

My sons Daniel and Sam think I do a very boring job, so they will be excited when I tell them I appeared along with the "Killer Robots" and the "Captain of the Moonshots" at your sessions.

I'd like to start by showing you four pictures and asking you to decide which is the odd one out, because it's reveals the theme of my talk: what kind of future we want to build.

The first is my dad. His name was Ralph Miliband. He was a Marxist professor.

The second is Willy Wonka, the genius who owns the factory in Charlie and the Chocolate Factory and eventually gives it all away to Charlie's family.

The third is Margaret Hodge, Labour chair of the public accounts committee, who, as you know, has been very critical of Google in the last few days.

And the fourth is Google, along with your founding slogan: "Don't be evil".

So, as they say on "Have I Got News from You?", I'd like people to tell me who is the odd one out.

Well, I'll tell you my answer.

My answer is that it is my dad.

Because he's the only one who thought that the route to a fair society was not through capitalism but through socialism based on public ownership.

It wasn't just my dad who thought it, of course.

Until 1995 this view was enshrined on the membership card of the party I now lead.

Tony Blair got rid of it and rightly so, because nationalising the major industries is not the route to a fair society.

Nowadays, there are some people who will tell you that because capitalism is here to stay there aren't really any choices any more about what kind of society we need.

But I don't believe that either.

So here's another four people that might tell us why.

First, here's Richard O'Neill, he's a small businessman who runs a small company called School Office Services in London and despite it being a highly competitive industry, he prides himself on paying all of his workers a living wage.

The second is Muhammad Yunus, the microfinance genius, who won the Nobel peace prize.

The third is Charlie Mayfield, who is head of Britain's major employee-owned retail chain, John Lewis, sharing its profits with its workforce.

And, the fourth is Montgomery Burns, who runs the nuclear power plant in The Simpsons.

Now, the odd one out is obvious this time.

It is Mr Burns.

He's not such a good guy.

He leaves radioactive nuggets lying around.

Of course, he is cartoon character, but I could have substituted him with RBS or some of the other big banks before the financial crash.

He illustrates my case today because there is a choice to make.

A choice between an "irresponsible capitalism" which sees huge gaps between the richest and the poorest, power concentrated in a few hands, and people are just in it for the fast buck whatever the consequences.

And a "responsible capitalism", and this is an agenda being led by business, where companies pursues profit but we also have a equal society, power is in the hands of the many and where we recognise our responsibilities to each other.

And my case is a "responsible capitalism" isn't only fairer but we're more likely to succeed as a country with it.

Now, this is an argument I have made for the last two years, as leader of the Labour party.

And today I want to apply it to the internet and the digital age.

On the face of it, we have many reasons to believe that digital technology is taking us to a more "responsible capitalism".

Digital technology has opened up markets to people who used to have no access to them it, from the African farmer to the small business people in my constituency.

From politics to media, it helps break down old hierarchies.

And by making the world more interconnected, the internet creates communities that are more likely to see their responsibilities to each other.

And of course, Google is at forefront of this.

People all over the world rely on you.

And from your search engine, to Gmail, to Google Glass, you have been at the cutting edge of all this revolution.

And I applaud you for your innovation.

Of course, you are used to politicians coming and saying this sort of thing.

But if that's all there was to it, there weren't any big questions that we need to resolve, then frankly I am not sure I should be here.

But there are choices we need to make.

The internet opens up opportunities for millions, but countries and people can be left behind.

The internet breaks down old hierarchies but it can also create new powerful vested interests.

And the internet connects people across the globe, but it can also enable footloose global companies to shirk their responsibilities.

The rules that we set, the behaviour we encourage, and the cultures we reward will all help to determine which future we end up in.

Whether our economy has more Mr Burns or more Charlie Mayfields.

Let me start with how we give every individual an opportunity to benefit from the internet and how we avoid being left behind as a country.

There are still 2.6 million households in Britain without access to basic broadband.

And there are millions of people in Britain who have never used the internet.

That digital divide excludes the potential designers, innovators, entrepreneurs of the future.

We've got to turn it around.

It's bad for them and it is wrong for our country.

But taking advantage of the internet goes far beyond access.

It is about putting creativity at the heart of our education system.

Google has recognised this by distributing Raspberry Pi computers to schools across the country.

But we need to take that insight and use it to transform the way our whole national education system works.

Unfortunately, our education is going in the opposite direction.

Schools are spending 15% less time on art, design and technology in England, compared to only three years ago.

There are over a third fewer teachers being trained in these subjects.

And it is no wonder.

The government's favoured EBacc simply doesn't include creative and vocational subjects.

Art, design, technology and creativity have been rendered second class.

But this is precisely the wrong message to be sending out to schools.

Just think about Sir Jony Ive.

As a kid his Christmas present every year was a day in the classroom with his parents who were design teachers.

Sir Jony went on to change the world by designing the iMac and iPad.

We need to make sure the next generation aren't just good at using Google, Facebook, and YouTube, but are also designing and creating the next phase of the digital world.

That's why we have to put art, design and technology back at the heart of our education system.

The second part of our task is to harness the ability of the internet to transform our economy.

In particular making sure that power isn't concentrated in a few hands, but we allow the smallest firms to flourish.

Enabling individual creators to work hand-in-hand both with the public sector and with global companies as they design the next generation of technology.

That will only happen if the big firms don't squeeze out their smaller rivals.

Sometimes markets themselves see off this danger.

Like Google did when it gave Android to the world, open source.

It prevented the smartphone market being monopolised.

But we can't rely on the private sector alone.

In the public sector the principle should be create more open access.

Think of our great public institutions, like the BBC and the British Library, there is more we can do to open them up, through digital public space.

Think of the old world where you had to go to the British Library, where you had to go and have a membership card to get in.

Then imagine a world where you don't need to go to the British Library with an exclusive membership card to access to the amazing archives they have.

Helping a whole new generation of small businesses in this country.

We also need to make sure there are proper financial returns to creativity.

So Labour is working with the present government, starting with the Bill currently going through Parliament, to resolve the problems over copyrighting, piracy and intellectual property.

And finally, there needs to be regulation that responds to the complexity of the internet.

Preventing monopolies arising while being careful not to stifle creativity and we should work with the industry to make sure that doesn't happen.

The case has been made, including in our Small Business Taskforce, that Britain needs a digital ombudsman to track anti-competitive practices as they emerge, and provide information to government as they work with regulation at a European level.

We welcome people's views about whether this is a sensible way forward.

Above all, if we're to have a responsible capitalism we need to make sure that the opportunity offered by the internet is spread to a large number of small businesses not restricted to a small number of large ones.

To create a more responsible capitalism, we also need responsible companies.

It is great that the Google Big Tent encourages debate on every issue.

And I want to engage with you on the issue of tax that has been so prominent in the last few days: with Google, Apple and Amazon all in the spotlight.

The first and primary responsibility of government is to get the law right.

I welcome Google's call for international tax reform.

The government should be putting forward proposals now to make this happen at the G8.

Those proposals should guarantee country by country reporting transparency to show how much profit firms are making and tax they're paying.

Reform of the rules on transfer pricing to stop companies from shifting profits unfairly.

A crackdown on tax havens as well.

I hope Google will support us in our endeavours.

And, let me say, if we cannot get international agreement, a Labour government will act here at home.

But does the responsible company need to do more than obey the letter of the law?

My answer is yes.

In Google's 2004 IPO prospectus, it said:

"Don't be evil. [We will] be stronger in the long term, we will be better served – as shareholders and in all other ways – by a company that does good things for the world, even if we forego some short-term gains. This is an important aspect of our culture and is broadly shared in the company."

So you were saying: Your employees want a culture where they feel they are doing the right thing.

Your customers want it too.

Our society depends on the right messages being sent out from the top.

And the reputation of business depends on the most prominent businesses doing the right thing.

That's why I spoke out after the Select Committee hearings last week.

I can't be the only person here who feels disappointed that such a great company as Google, with such great founding principles, will be reduced to arguing that when it employs thousands of people in Britain, makes billions of pounds of revenue in Britain, it's fair that it should pay just a fraction of one per cent of that in tax.

So when Google does great things for the world, I applaud you.

But when Eric Schmidt says, its current approach to tax is just "capitalism", I disagree.

And it's a shame Eric Schmidt isn't here to hear me say this direct: when Google goes to extraordinary lengths to avoid paying its taxes, I say it's wrong.

And it's not just me that thinks it.

It is crystal clear from your own founding principles.

So these are some of the ways we create a more responsible capitalism.

A society that is more equal not less.

Where power is spread to the many, not concentrated in the hands of the few.

And where we show our responsibilities to each other.

I started with my dad and I will end with him.

He was wrong about public ownership.

But he was right about something else.

He was a refugee here in Britain.

Who came here at the age of 16 in 1940.

And he joined the Royal Navy.

He used to talk about those days in the Navy, where people of all backgrounds, all walks of life, came together for a common purpose.

That's how Great Britain succeeds.

That's how great companies succeed.

That's what responsible capitalism is about.

That's what I call One Nation.

That's the future we must build together.

• Google
• Tax avoidance
• Corporate governance
• John Lewis
• Retail industry
• United States
• Labour

Ed Miliband also warns Eric Schmidt at Google conference that it's wrong for multinationals not to pay fair share

Nick Clegg raised the controversy over Google's tax affairs directly with the internet giant's chairman Eric Schmidt at a meeting in Downing Street this week, the deputy prime minister revealed.

News of his intervention came as Labour leader Ed Miliband told Schmidt at a conference: "When Google goes to extraordinary lengths to avoid paying its taxes, I say it's wrong."

Clegg told Schmidt his company was among those causing massive public concern over the amount of tax it pays, and it was not in the long-term interests of his own company, as he himself was discovering. David Cameron did not mention Google by name when discussing his drive for greater tax transparency with business leaders at the meeting on Monday.

The issue is hurtling up the political agenda amid successive corporate tax avoidance scandals, and growing demands by world leaders for concerted international co-operation to transform the international tax code for a digital global age.

Cameron on Wednesday was due to urge an EU summit to make progress on tax transparency. Miliband this week criticised the PM – who has vowed to make tax a top priority for the UK's presidency of the G8 this year – over his failure to confront Schmidt on the issue .

Miliband told the Google-hosted conference on Wednesday: "When Google does great things for the world, I applaud you. But when Eric Schmidt says, its current approach to tax is just 'capitalism', I disagree. And it's a shame Eric Schmidt isn't here to hear me say this direct: when Google goes to extraordinary lengths to avoid paying its taxes, I say it's wrong.

"And it's not just me that thinks it. It is crystal clear from your own founding principles."

Google paid only £10m in corporation tax in the UK between 2006 and 2011, despite revenues of £11.9bn.

Clegg told a press conference in London this morning: "My overall approach to tax is the obvious one. I put this directly to Eric Schmidt from Google and other business leaders at a meeting in Downing Street a couple of days ago.

"We are bringing the tax burden on corporations down by lowering the rate of corporation tax but in return people have to pay their fair share."

He said tax havens were symptoms of the growing pains of globalisation. "You have got tax systems that are national, rooted in an old economy, and now we have got these new corporate goliaths that operate in this disembodied way, particularly in the digital sector, who quite unsurprisingly think they can exploit the best deal for themselves in the cracks and crevices between the national tax systems.

"What we can do and what we are doing, absolutely at the core of our G8 agenda, is to say we have got to ensure the rules apply more evenly across the piece so big companies can't play cat and mouse with the tax system."

Aides stressed that Clegg's comments to Schmidt, made during a regular meeting of the PM's Business Advisory Group, should not be seen as a "dressing down". The deputy PM raised the issue of Google's tax affairs in a "polite but firm" way as an example of the controversies which have embroiled a number of major companies in recent months, said an aide.

Clegg told Schmidt there was massive public concern "as Google are finding out" that, at a time of austerity for ordinary households and businesses, big companies should pay their fair share of tax.

Clegg also admitted that some European Union nations such as Ireland were making it harder to reach an international agreement to clamp down on avoidance.

He said he was not "seeking to impose some rigid straightjacket of tax harmonisation", but "you do have to have clear standards of transparency and rules by which taxes are administered".

He added: "There are some governments that feel [these companies] have stolen a march on tax jurisdictions and are concerned that this will erode their competitive advantage. I think the worm has turned on this. There is now a feeling – you can see it America, Germany, the US and France – that people construct a system where there is a level playing field."

• Tax avoidance
• Corporate governance
• Tax and spending
• Google
• Tax
• Nick Clegg
• Ed Miliband

Climate Desk are invited to dinner by their most pernicious, climate-denying troll, Hoyt Connell

London-based startup secures funding from Balderton Capital and sets sights on younger users fleeing Facebook

If the thought of an iPhone app for people to slap virtual stickers and slogans onto photos – often of One Direction – share them with the world and then remix one another's creations makes you angry, you'd best click away now.

Urturn's app does exactly that. It launches today, alongside news of a $13.4m funding round for the London-based startup, including $10.7m from Balderton Capital, whose previous investments include Bebo, Lovefilm, Betfair and Wooga.

Urturn began life in early 2011 as a service called Webdoc, before rebranding and relaunching its website in January 2013.

Billed as a "social platform for self-expression", it provides its users with templates to customise photos, pull in music and video clips, and then share them on Urturn itself, as well as Facebook and Twitter.

Templates currently available include the ability to doodle, add speech bubbles and associate SoundCloud and iTunes tunes with photos, turn images into polls ("Love it/Leave it" and "This or That" for example), as well as a "Daft Punkify" template to add the electronica duo's robot helmets to photos.

If it sounds like a silly novelty, you may well not be in Urturn's target audience. Chief executive Stelio Tzonis thinks that it's the desire for this kind of self-expression that may peel away teenagers from Facebook, even if the things they want to self-express about remain the same.

"The kind of usage we have on Urturn reflects the usage on social networks: music, celebrities, lifestyle, design, fashion…" says Tzonis. "Our audience is first US, then UK, and then South America, and it's teens and young adults talking about these topics."

He adds that Urturn currently has more female users than males, and while the ratio swings week-by-week – "it depends what One Direction are doing!" – on average he thinks around 60% of usage comes from girls and women.

The impetus behind Webdoc (and now Urturn) was frustration at the difficulties of "sharing and playing around with content" on social networks. People could post photos, videos and status updates, but getting more creative with them required skills and tools – Photoshop, for example.

"What we learned was that social networks really brought to us a way to connect to people and share, but weren't so good when it came to expressing yourself," he says.

"The more expressive you wanted to be, the more complex it was, and you needed something like Photoshop. If you wanted to be more spontaneous, you had to be very simple. We wanted to connect those two ideas."

Browse the Discover tab on Uturn's website, and you'll get a sense of what spontaneous expression means for its users. Yes, lots of cats and lots of Harry Styles, but also fashion – Cosmopolitan UK is using Urturn for example – music and lifestyle content.

Musicians and their marketing teams have already taken to the platform too: it's been used by/for Alicia Keys, David Bowie, Green Day, Ellie Goulding and Kendrick Lamar, as well as One Direction and Union J.

What they – and Urturn's young users – have caught on to is the potential of the "Your Turn" button on every piece of content created on the service.

When clicked, it enables the user to make their own version using the same template. In a musician's case, it might mean fans customising and sharing their own versions of a tour poster, for example.

"We have seen teens totally get it, immediately. We didn't have to educate them," says Tzonis. "They understand that the Your Turn button means it's their turn to express themselves. And that's the reason celebrities are using us: they want to engage, rather than just post one piece of content that is replicated with shares and retweets."

For now, Urturn is creating the templates, but it is planning to launch an API for external developers to make them too – something that has commercial potential for brands and media companies, but also for quick-off-the-mark satirical memes.

The new iPhone app is part of Urturn's drive for as much spontaneity as possible, with Android and other devices to come. The company currently has 25 staff, and while its focus is global, Tzonis says being headquartered in London has been an advantage.

"When I was in Silicon Valley, a lot of people said 'Why aren't you here?' The reason is very simple: in London, we have all the technology industry – Facebook, Twitter, Google etc – but also all the music industry, media and publishing, lifestyle and the advertising industry. In the US, those are spread between Silicon Valley, New York, Los Angeles."

The $13.4m funding round is large for a London startup, and not bad for a company at this stage by Silicon Valley standards either. Tzonis says that building the API for developers is the first thing that it will fund, as well as further development of Urturn across all devices.

"We didn't want to be one of those startups that just try to develop yet another Instagram, yet another Pinterest or yet another iPhone app," he says.

"The reason we had interest from top VCs in the US and Europe was the bold vision that we had: there is this trend of people looking beyond Facebook for ways to express themselves in a very spontaneous and fast way, and the VCs saw the vision that what we want to achieve is really big."

So how does Urturn make money from all this? Tumblr being bought by $1.1bn despite only making $13m of revenues in 2012 suggests that Urturn's investors may be less worried about short-term financial success and more concerned with the company getting big and disruptive enough to persuade a tech giant to acquire it.

Still, Tzonis has ideas. "The service will always be free to anyone can express themselves, but we believe we will have so many opportunities to monetise what you could do in an expression, and how we can promote an expression or post inside the service," he says.

Brands, then, although affiliate deals for music and other products will also be a source of revenues, albeit not a large one.

What about copyright and other legal questions? As Pinterest has grown, for example, it has faced more scrutiny about where people are finding the images they pin on that service, and whether it has the rights to republish them.

Music is covered off for Urturn – "we don't allow uploads of music by users, and we use SoundCloud and iTunes," says Tzonis – but a service where people can grab photographs from, say, MailOnline and then customise them with any text they like may have other challenges in store.

The fact that Urturn "always links back to the source" of images may not mollify some photographers, rightsholders and media companies, while it will be interesting to see what happens when the first Urturn post libelling someone famous (and rich enough to afford good lawyers) goes viral beyond the service.

There are two main risks for people who aren't part of Urturn's target demographic when trying to gauge how successful it might be.

One: assuming that because you don't get it, Urturn is a rubbish idea that's doomed to fail. Two: assuming that because you don't get it, Urturn is bound to be a hit with The Kids. Both assumptions may be proved false.

In the first case, there's already evidence that the kind of "self-expression" offered by Urturn really is meaningful to teenagers. In the second case, it's easy to say that something is targeting teens, but harder to predict whether they'll take to it in large numbers and stick around for the longer term.

$13.4m at least gives Urturn the runway to find out, and possibly attract the acquisitive attention of Facebook as it nervously monitors the behaviour of its younger users, and figures out how to give them more tools for self-expression.

"It's important for them to wait until there is a very big success, then do an acquisition," says Tzonis. "They will have these kinds of features ultimately, but through acquisition and then integration."

• Apps
• Technology startups
• Smartphones
• Digital media
• Social networking

James Toback and Alec Baldwin discuss their documentary on the film industry, partly filmed at the 2012 Cannes film festival

We speak to European Xbox boss Chris Lewis about the aims and ideas behind Microsoft's next console – including cloud gaming, Kinect and TV content. But will he tell us the price?

The Xbox One is now a reality, and after Microsoft's event on Tuesday, plenty of questions remain about the company's vision for an all-in-one entertainment system. So what is the message behind the machine, and when are we going to find out more?

We spoke to Europe's Xbox chief, Chris Lewis, directly after the reveal event, throwing in questions about innovation, pre-owned titles and the dangers of cloud computing. We found that Microsoft has big plans for E3 and the future of gaming – it just isn't ready to talk about them just yet.

It seems the concept behind Xbox One is an all-in-one entertainment device; something that will effectively run our living rooms. Was that what you wanted to get across?
That's certainly what we set out to do. We thought this was a logical first step, to have folks here in an intimate environment in our home, and to talk about the vision in the way that we did. Sometimes the temptation is to put in too much, but we're trying to be logical, to have a cadence to the way that we communicate the vision and the content. Think about today as the first step – you'll learn a lot more about the games at E3. We gave a strong taste of what is to come, it was tempting to show more. I loved to show how we're deepening our relationship with EA – that's crucial for Europe.

Can you tell us more about the "strategic partnership" you've set out on with Electronic Arts? What does it mean, in practical terms?
I can tell you some fairly generic things. We'll be more specific in due course. You can be confident that this is a more meaningful partnership than we've ever enjoyed with them in the past. What we're now going to be offering is something unique to our consumers, particularly around Fifa and we'll be more specific about that later. But we've always partnered well with publishers, retailers and content companies.

So Xbox One will allow users in North America to view live TV on their consoles. But it seems that feature won't be available in Europe for the console launch. Is that correct?
Well, you shouldn't assume that necessarily. What you should assume is that we know how important it is to get that proposition right everywhere; not just in North America and Europe, but everywhere. We have a vision for more intelligent TV – what Yusuf Mehdi showed on stage was a natural and intuitive way of handling television, whether it's live or catch up or movies, Kinect is the centre of that experience; it is a natural way to interact with your entertainment. We know we have to offer that everywhere, but we're not being specific about when and where. We're committed to make it happen.

And similarly, the content deal you have with the NFL, which will mix live match footage with interactive 'companion' apps like Fantasy Football – surely you're working on similar partnerships elsewhere? The Premiership in the UK for example?
Yes. We know we have to deliver partnerships like that everywhere. I mean, look at what we did with Sky, that was the first of these relationships on 360, we led the way in Europe – we know these are critical to deliver. I'll have to frustrate you by saying that I can't be specific. But it is an important point.

You've also announced a Halo TV series, produced by Stephen Spielberg. Does this hint toward a future of Microsoft as a TV content creator? Will there be more exclusive series' like this to come?
Sure. Is Halo a logical place for us to start? Sure. The reaction to that has been very positive. I have nothing to announce today, but we know we have to offer a portfolio of entertainment content.

One of the things that has come up on Twitter after the event was the whole area of pre-owned games. It seems that if you buy a game it has to download on to your system, and then if you sell the disc, the purchaser might have to buy a pass to use it, and it could be that the data is removed from your own hard drive if someone else tries to install the same copy. There's a lot of confusion here. Can you clarify things?
I'm not going to get as specific as you might like. I'd answer that by saying today is great news for gamers: we will support the dynamic of used games – it's important for them, it's important for retailers. We are supporting that but the details as to how it will work, we'll reveal over time. But I want you to take a positive message form this: we support it.

Okay, well, let's go back to this idea of the all-in-one entertainment system. Who are your rivals in this space?
You may be surprised to hear me say that we don't fixate on our competitors, in the way you might think. That's not to imply that we don't think their highly competent, it's not that. It's not about us being complacent. It's more, our focus is on our consumers. It depends on the consumer you're talking about – if you're thinking of a hardcore gamer, of course we have to consider our competitors in that space; we have to make sure the experience is more unique and compelling than anywhere else. But we have to focus on the consumer.

So these days you think more about consumers than gamers? I mean, there are plenty of people in your core audience who don't care about NFL or gesture controlled television – they just want to play games. And it was 30 minutes before we saw any games footage at the event.
Well, actually I use consumer as a collective term for everyone who uses our digital entertainment. A gamer is a part of that community. We're not in the least bit complacent about delivering great content for gamers. We need to talk at E3! I think we will use E3 as an opportunity to talk about the portfolio of games we have coming, both from our own studios and from third parties. People will see an awful lot more about games there.

At the event you mentioned eight entirely new franchises – what will they bring us that we've never seen before?
The technology platform has to allow experiences that were only ever dreamed of in the past. The power of the platform, lined with the power of the cloud – that's going to create a huge step-change in terms of the offering – more immersion, more detail, automatic downloads that increase the game universe… all of those things will be compelling. The developers like the power of the platform, they like Kinect and how it can enhance the game experience.

I think, though, that you have a challenge ahead, both with gamers and with many studios, to convince then that Kinect is worth another try.
Well, you know, we've sold more than 25m Kinect sensors…

Yes, but how many of those are still in regular use? And developers certainly aren't supporting it in great numbers.
Look, I understand your point. As you saw today, Kinect is central to the design and thinking of Xbox One, but that centrality has to be based on the fact that the power of the device gives consumers what they want and is natural and compelling. For some games it will be very central to the experience. There is a lot more to come in the coming months, I think you will feel better about things than you do today.

But are we going to get a game at E3 that is totally original and would be fundamentally impossible on an earlier console? I mean, Call of Duty Ghosts looks nice but it's Call of Duty. Fifa looks great but it's Fifa…
Stay tuned! We know it's important. I can't tell you everything today. It sounds like I'm trying to duck your questions but I'm not! There's more to come.

The Cloud stuff is interesting – the idea that some of the computation can be cloud-based that it will lead to emergent worlds, and games that evolve over time…
Absolutely…

But there are also worries in this area. First, how long will games be supported if they have cloud content and secondly how secure is that data?
We take security really seriously, we need to apply diligence to it. Words are easy, but an awful amount of work has gone into ensuring its safety. We appreciate the need for privacy and security. And the investment into infrastructure is huge – the way [chief product officer] Marc Whitten puts it is this: the user has one Xbox One at home, but you also have three or four more in the cloud – that's the way to think about it, it's that big.

But what about longevity. If I buy an Xbox One game this Christmas, will I still be able to play all the cloud-based content in 2020? Or beyond?
Same applies. This generation proved to be even longer than the last one. Xbox 360 will sell for multiple more years. People like the fact that generations have got longer – we have to be invested in the longer term with content. We're planning with that in mind.

And will retail stores be an important way to purchase Xbox One games throughout its lifespan?
Yes... Yes. I think we want to be where our consumers want us to be, and they want us to be in retail. Retailers have great relationships with consumers – we're respectful of that. But equally we want to have a digital relationship with consumers. The two will coexist.

Will you announce a price at E3?
We're not saying when we're going to talk about price – we're going to announce it at a logical time. I'm not going to tell you today.

I would have been surprised to be honest...
We're not being specific about when, but be confident we will announce it in a timely fashion.

There have been rumours about a subsidised pricing model – the idea of being able to buy the console for a cheaper price if you commit to a subscription. You tested that with Xbox 360 in some territories – will we see it for Xbox One?
I'm not being specific about that. We test lots of things. We talk to consumer groups all the time about how we offer value – we'll say more in the coming weeks and months.

So the industry is facing the prospect of two consoles arriving within a month of each other. Are you ready for that as a company?
Yeah... if it happens. The market is primed for it, people are excited about it; the console market is continuing to grow. Our anticipation is that the next generation will be bigger than this one. We see a healthy trajectory for this business. There is massive growth potential for us in countries like Russia, South Africa, Poland… Retail is ready, we've just got to make sure we deliver.

• Xbox
• Games
• Microsoft
• United States

Labour leader makes a speech in which he says the internet company needs to 'do the right thing' on tax. By Charles Arthur

The Kickstarter-funded Veronica Mars movie showed fan engagement at its strongest, but as the canned Zombieland TV pilot proves, viewers can also kill a project

After jumping into the TV game with a set of eight free-to-watch sitcom pilots last month, Amazon is now acting like a proper US network by culling its slate. As the Amazon CEO Jeff Bezos put it when the pilots arrived online: "Amazon Studios is working on a new way to greenlight TV shows. The pilots are out in the open where everyone can have a say … Our customers will determine what goes into full-season production."

So far, they've picked two: Alpha House (John Goodman stars as a work-shy Republican walking and talking around Washington) and Betas (wannabe app coders in Silicon Valley try to land a big-fish investor). But after reviewing the "customer" feedback and checking the viewing metrics (how many people continued watching until the end, for example), Amazon Studios has decided there won't be a new dawn for the Zombieland movie's TV spin-off.

A few typical comments from the one-star pile: "I can't overstate how bad this show is. Really, if you're considering watching, don't." "I want to forget it exists so it won't marr my memory of the movie any more than it has." "Felt more like I was watching a SNL parody of the movie rather than a series based on it." "What did I like about the pilot? The title."

As Zombieland's creator Rhett Reese posted on Twitter: "I'll never understand the vehement hate the pilot received from diehard Zombieland fans. You guys successfully hated it out of existence."

In other words, the fans killed it. Without the original movie to compare it to, it wouldn't be too hard to imagine Zombieland the TV show working as a kind of Walking Dead/My Name is Earl hybrid – the running gag about not being able to protect any of the other humans they find, and the ageing biter with false teeth were promising moments. Fans of the original didn't seem to be able to get past the feeling that they were being sold knock-off versions of Woody Harrelson, Jesse Eisenberg, Emma Stone or Abigail Breslin. In Amazon recommendation speak, it was a case of: "If you like this, you won't like this."

Traditionally, fan engagement has been the other way around – people banding together to save underperforming shows from the axe, usually through the medium of posting goofy food items to network execs, who have received everything from nuts (thanks, Jericho fans), to bottles of Tabasco sauce (Roswell), sunflower seeds (The 4400) and Pez dispensers (Witchblade). And of course, way before Netflix decided there might be money in bringing back the Bluth banana stand, the Fox mailroom was inundated with bananas whenever they threatened to pull the plug on Arrested Development.

The recent success of the Kickstarter campaign to fund a Veronica Mars film offers a new, more practical solution for fans of cancelled TV shows – the chance to put money where their mouths are. On the other hand, Zombieland's failure to make it past the pilot stage could be the first time a show has been effectively cancelled by its own fans (and in the process denying them a whole series they could have spent hours hate-watching).

Maybe there's another untapped market that Amazon has inadvertently stumbled across here. What about a more organised outlet for haters to crowdsource cancellations: Kickstopper, anyone?

• US television
• Television
• US television industry
• Television industry
• Amazon.com
• Crowdsourcing
• Zombies
• Online TV
• Digital media

Australia captain says David Warner has learned a valuable lesson after a Twitter rant against two Australian journalists

Analysts say highly rated shares already price in much of positive outlook for UK chipmaker

Leading shares are pausing for breath after coming within sight of their all time high, with Arm one of the main fallers.

The highly rated shares have dropped 47p to £10.18 - more than 4% - as worries about the chip maker losing market share outweighed a relatively positive investor day on Tuesday.

Analysts believe it could be time to take some profits after Arm's recent strong run, suggesting much of the company's prospects were already in the price. It numbers Apple among its key customers, but there are concerns it could lose business to Intel in the tablets and smartphone markets, which would not be made up by its move into servers. On top of that there is new management in the form of Simon Segars replacing the long standing Warren East as chief executive. At Liberum Capital, analyst Janardan Menon said:

Arm will clearly continue to take share in many market segments such as servers, networking and microcontrollers. However from a royalty revenue standpoint these markets are relatively small compared to the smarphone and tablet markets. Within these two key markets we expect Arm to see significant market share losses to Intel.

Arm's royalty growth rates are likely to slow down below current market forecasts as this market share loss comes through, amidst overall slowing volume growth and average price declines in the smartphone and tablet segments. Licensing growth is also likely to be more moderate going forward. We do not think these slowing trends are reflected in Arm's share price which is currently trading at 53 times and 48 times our forecasted 2013 and 2014 earnings per share. We believe the stock is expensive and maintain our sell recommendation and 725p price target.

Vijay Anand at Espírito Santo put a neutral rating on the company:

While it was a typical Arm investor day with limited new information on the short term, the company led by its new chief Simon Segars articulated a bullish outlook regarding its long-term prospects. While the lack of any incremental short-term positives implies that the shares could consolidate in the near term, in hindsight we were probably early in downgrading the stock to neutral. In terms of valuation....much of the positives are priced in.

At Morgan Stanley, Francois Meunier said:

The main issue for Arm's new chief executive now is to plan for a relay of growth beyond 2015-2016, as we expect
growth to have peaked by then according to our statistical model of price elasticity in the chip market. To chase the next opportunities, Arm probably needs to increase the R&D budget for 2016-2017 slightly above consensus.

The PE rating continues to defy gravity at 55 times, ignoring a potential design loss in a Samsung tablet to Intel, Intel's new Silvermont chip, signs of commoditization in the smartphone market and consumers' appetite moving from number of cores to bigger screen sizes. Arm remains best in class but the share price is pricing in a lot already.

Overall the FTSE 100 has eased 18.07 points to 6785.80 after coming within 130 points of its all time high. Markets have been pushed higher by central banks acting to boost the global economy with low interests and quantitative easing. But as the IMF delivers its verdict on the UK economy, the latest minutes from the Bank of England revealed it was still split 6-3 on whether to expand its QE programme. Bank governor Mervyn King, Paul Fisher and David Miles all pushed for another £25bn of QE, but were outvoted again. Meanwhile retail sales fell sharply in April.

Attention will also be on a testimony by US Federal Reserve chairman Ben Bernanke later on Wednesday, following uncertainty over whether the US's own bond buying programme will start tapering off.

Among the risers, Lloyds Banking Group is up 1.07p at 62.6p after saying it could meet capital requirements set by the regulator without needing to issue new shares or debt. Royal Bank of Scotland has climbed 2.8p to 345p as it said its business plan did not call for the issuance of capital instruments although this remained an option.

Kazakhmys is leading the mid-cap fallers, down 21.8p at 343.5p after UBS cut from buy to neutral and reduced its price target from 465p to 385p.

The bank said that the proposed acquisition of Eurasian Natural Resources Corporation, down 0.9p at 265.2p, by its founder oligarchs - which involves using the Kazakh government's stake in Kazakhmys - could cause uncertainty for the miner:

With current ENRC shareholders likely to be event-driven, there is the potential these holders will not be long term holders in Kazakhmys, raising the risk of some flowback.

• ARM
• Lloyds Banking Group
• Royal Bank of Scotland
• Kazakhmys
• Eurasian Natural Resources Corporation

Microsoft gives customers their first look at its Xbox One, which carries extra features such as television, Skype calling and heartbeat measuring

A selection of the best images of animals and technology submitted via GuardianWitness

TV veteran Noel Edmonds might be used to be being in the spotlight, but he looks set to be outshone by a new rising star: his store mannequin. The Deal or No Deal presenter drives around London with a mannequin in the back seat of his black cab, as you do, to stop people flagging him down. The Daily Star reports that Candice, who is dressed by Noel's wife Liz, has now become something of a celebrity in her own right. The shop dummy has 18,000 Twitter followers and has received offers from fashion houses, record labels and retail outlets. Edmonds reckons there might also be potential for perfume ("eau de la dummy") and jewellery. Lets just hope it doesn't go the way of 1987 film Mannequin, which saw Sex and the City star Kim Cattrall playing a beautiful store dummy that comes to life, usually at night.

• Television industry
• Television
• Twitter
• Celebrity

We get some one-on-one time with the new Xbox joypad and the revitalised version of the Kinect motion tracking technology

You can't trust the internet. Prior to the Xbox One launch event, there were rumours the controller would be a wildly different beast, perhaps with its own touch pad in response to Sony's refreshed PS4 Dualshock. The truth is simultaneously more mundane and more intriguing. The new pad looks and feels a lot like the old Xbox 360 version; it's roughly the same size and the same weight. But the design team has added or improved on over 40 features – some of which become immediately obvious when you first use it.

A good starting point is the addition of intricate rumble motors on the triggers – which are now rather excitingly called "dynamic impulse triggers". It seems the tech behind these has changed, from a mechanical linkage to a magnetic sensor, so developers are now able to register even the slightest touch, bringing more analogue depth to the squeezing action.

In a demo session after the reveal event, journalists were given the chance to try out the controller with some very short (non-interactive) demos. In the first, we're shown a heartbeat pounding in the chest of a simple human figure; every two-phase beat produces a rumble that moves across from one trigger to the next, which is actually faintly disconcerting and may well prove useful in horror games. I preferred the driving demo, in which hitting the button to start the engine sends a clunk through the triggers as though you've just twisted a key in the ignition. Another one has a character forming a fire spell in their hand, which has vibrations growing in the triggers, before the spell is cast, which is accompanied by a blast of rumble across the whole controller.

It seems that the trigger rumble is great for close up personal movements, while the main part of the pad is more for environmental effects – there's a real sense of depth to it now. And of course, the trigger feedback is going to be great in shooters – another demo simply shows a gun being fired, and has the right trigger rumbling alone in response, so you get a real feeling of a metal trigger being depressed.

The new thumbsticks feel really nice. They're smaller in diameter than the Xbox 360 versions and the outside rim is textured (Microsoft refers to this effect as "knurling") so you have a better grip. They also apparently require 25% less force to move them, making for more fluidity of movement. Also, although the size and shape are similar to the predecessor, the edges have apparently been better contoured to fit a wider variety of hand sizes and the battery compartment has been changed so that it's now inside the controller body rather than sitting beneath it, getting in the way. I hadn't noticed this in the past really, but the new design is comfortable and pleasingly bulky. Oh and fighting game fans may be pleased to not that the D-pad is now a proper cross rather than a circular disc, and you get a satisfying click from button presses, which should be better for moves which require circular sweeps.

Elsewhere, the designers have updated the port where the headset used to go. Apparently, this will allow much higher fidelity of communications and will be used in unannounced peripherals, perhaps some sort of text input device, or a microphone? The communication between the wireless controller and the console has also been improved, with the response times reduced by about 15% to 20%.

As for Kinect, it seems that every aspect of the technology has now been hugely improved and updated. The camera is three times the fidelity of the old version and offers a much wider field of vision (about 40%, meaning that up to six players can now be spotted and tracked by the system. Importantly, too, it allows participants to stand much closer to the camera – when I tried it, it was able to track me to within a couple of feet of the console – not the generous six feet that the Xbox 360 Kinect wanted out of you.

During a demo with Scott Evans, the group programme manager of the Kinect department, we see how the motion tracking sensor can pick out the user's individual fingers, facial expression, even the buttons on a shirt. Apparently, to create this almost 3D model, it uses a technology called 'time-of-flight' which measures the amount of time it takes for photos to bounce back off you to the sensor. And if you're playing in low light conditions there's even a infra-red – or 'active IR' mode so it'll see you even in pitch darkness.

The best part of the demo, however, is when I get to test the skeletal tracking, the part of the tech that analyses player body movement – which now happens in high-definition with 25 joints tracked. Again, the message is, it's all massively improved. The sensor can pick up where I'm looking – if I move my face away it knows (and may even be able to pause onscreen content until I look back). It knows if I swivel my arm or even my wrist; it can even use physics to track muscle use – when I stand on one leg it knows that all my pressure is on that one limb. If I jump in the air, it can tell that there is no pressure through the leg muscles at all. If you squat it can calculate the torque being applied through your legs. And when you throw punches at the screen it can measure the force of the movement. It's… weird.

But that's not the weirdest thing. The weirdest thing is that new Kinect can also track your heart rate. Yes, the sensor can track micro fluctuations of blood flow in your face, through the combination of the colour feed and the active IR. This will be useful for fitness games of course, but there's the potential here for use in survival horror games, ramping up the action if you're showing a fear response. In fact, the camera also reads facial expressions – it knows if you're smiling, frowning or looking surprised. All of this could be potential data for game designers.

So, the new controller is a rather nice, sturdy but sensitive re-think of the classic Xbox 360 pad, with decreased latency and increased functionality on those triggers. New Kinect takes all the ideas behind the first one and apparently makes everything work so your body is accurately tracked, different players are properly distinguished and you don't need a living room the size of a tennis court to play it. Microsoft is certain it can bring developers back into the fold – even though there's still this uneasy feeling that gamers don't actually want to get up and dance around their coffee tables. Actually, though, even if we see titles that merely use the microphone or heart monitor, it's still a huge leap over the first rendition of the tech. And of course with a 1080p colour camera and Skype functionality, you have a decent video chat system too. There is, whatever else you think of Xbox One so far, some potential here. The tough part is going to be convincing people.

• Xbox
• Kinect
• Microsoft
• Games
• United States

The Sage in Gateshead throws open its doors today to an assortment of technologists, geeks, scientists and entrepreneurs who'll be making their way north east for the annual Thinking Digital conference

Thinking Digital is a placemark in the calendar for many working in the technology and creative sectors and has helped put the north east on the map for innovative digital activity.

Yesterday was taken up with masterclasses for delegates but today the formal conference gets underway.

During the next two days, participants from across the UK will be treated to some of the most engaging expert speakers in their fields drawn from around the world.

In the introduction to the event, organisers explain their ethos and suggest that perhaps - it's not for everyone.

"In our six years of producing Thinking Digital we have come to realise that our approach isn't for everyone. For us, it's more than just a conference; it is an experience. Our focus on the total experience lies at the heart of our success."

The first day's schedule is one example of that approach. This morning there'll be the man responsible leading on the work to make digital public sector services easier to find and simpler to use with the GOV.UK portal, Mike Bracken on the same platform as 'the new king of Apple analysts' Horace Dediu .

While this afternoon, television's Maggie Philbin and the man who created Gateshead's 'Granny Cloud' - a network of grannies who go online to teach children in India - Sugata Mitra, are among the diverse roll call of speakers.

For those following online, the website is at http://www.thinkingdigital.co.uk, the Twitter hashtag is #tdc13 and I shall post regular updates from the sessions at this noticeboard I've created for the event at www.tdc13.n0tice.com or tweet @foodiesarah.

Plus fast charging for batteries, tax row grows, why solar costs aren't falling, Dropbox v Google Drive v Skydrive, and more

A burst of 9 links for you to chew over, as picked by the Technology team

Chinese hackers who breached Google's servers several years ago gained access to a sensitive database with years' worth of information about US surveillance targets, according to current and former government officials.

The breach appears to have been aimed at unearthing the identities of Chinese intelligence operatives in the United States who may have been under surveillance by American law enforcement agencies.

The database contained the information about court orders ordering surveillance relating to those operatives.

Sameer Singh:

The tech media has long been obsessed with the semantic differences between smartphone shipments and sales. In reality, all figures announced by companies, and those announced by IDC, are shipments (also known as channel sales or sell-in). Gartner is the only research house that tracks sales to end users (also known as sell-through). Comparing data from IDC and Gartner can give us good insight into channel inventory patterns across different smartphone platforms. This data suggests that Nokia & Windows Phone may be in for some trouble in the next few quarters.

Never knew that there was that difference between IDC and Gartner. But should the headline be "shipments" or "sales", then?

We haven't mentioned MacSlash for a while, but there's a rather interesting link to a story on the iWatch - a wristwatch running MacOS on a Transmeta chip. Or is there?

If anyone has an earlier reference to the fabled "iWatch" than this sighting from September 2000, get in touch.

The [US Senate] committee said the [Irish] Government has since the early 1990s negotiated a special tax arrangement with Apple, resulting in it paying corporation tax of less than 2%, and avoiding around $44 billion (€34bn) in US tax over the last four years.

Speaking on his way into a meeting of EU foreign ministers in Brussels, Mr Gilmore said: "They are not issues which arise from the Irish taxation system."

"They are issues which arise from other jurisdictions. That's an issue which has to be addressed, first of all in those jurisdictions and secondly … it needs to be tackled by having robust international agreements, and Ireland very much is in favour of that," he said.

Mr Gilmore said the Irish tax system was "very transparent".

Common thread in this tax stuff: it's always someone else's fault they didn't fix their tax loopholes.

Waiting hours for a cellphone to charge may become a thing of the past, thanks to an 18-year-old high-school student's invention. She won a $50,000 prize Friday at an international science fair for creating an energy storage device that can be fully juiced in 20 to 30 seconds.

The fast-charging device is a so-called supercapacitor, a gizmo that can pack a lot of energy into a tiny space, charges quickly and holds its charge for a long time.

What's more, it can last for 10,000 charge-recharge cycles, compared with 1,000 cycles for conventional rechargeable batteries, according to Eesha Khare of Saratoga, California.

Isn't the thing about recharging batteries that if you try to put too much power in, they overheat and catch fire? This sounds promising, though.

Mrco Arment was the first (and for a long time the only) employee at Tumblr, working alongside founder David Karp:

Intense focus requires neglecting almost everything else. David's focus on pushing the product forward meant that he didn't want to think about boring stuff: support, scaling, paperwork, and money.

Every time we'd get close to needing more funding, I'd try to convince David to hold out a bit longer or try to become profitable, and he'd convince me that everyone was better off if we'd focus on the product instead. And every time, he was right.

It's a great post.

The solar panels make up around 42% of the costs – or £4,200 of a typical £10,000 installation. The inverter adds 10% or £1,000. And the biggest cost? It's the labour, cabling, roof fixing and Installer profits making up 48% or £4,800 for a £10,000 installation.

As we reported in a recent blog, the price of the panels has dropped by half over recent years. Just don't expect that to mean your quote for a home solar installation will drop by the same amount.

Winer recalls a day in 2003, when Mayer was working for Google, which had bought Blogger and promised not to treat it specially:

a few weeks after the deal they broke the promise. They added a BlogThis! button to Google Toolbar. It only worked with Blogger. It would have been a simple matter to make it work with any blogging tool. But they didn't see why they should do that.

Back then Google cared a little about what I thought, so the result was a conference call between me and an exec at Google, Marissa Mayer. I was driving cross-country from California to Boston, so I stopped in Utah, in the parking lot of a 7-11 just east of Salt Lake City, and we had the call.
All I remember of it was there came a point in the conversation when Mayer had had enough. She just got up and left. I think the people remaining in the conference room were a little embarassed. Google didn't do anything to change the BlogThis! button.

All this is to say that the promises execs make on acquisitions are meaningless. They own the thing, they will do what they want to with it. It doesn't matter how many nice sounds Mayer makes on the deal. At the core she cares not one bit what the users of Tumblr think. She's saying what she needs to say to make the deal happen. To avoid a PR crisis on Day One. To make the team at Tumblr feel like their work has value to the new owners. That somehow this acquisition isn't actually an acquisition.

As cloud computing services become ever more popular, you might begin to wonder how much you can really trust them to perform when you need them? I decided to find out - by testing the top file-transfer/file-storage/file-backup services.

In many ways, getting a file from one computer to multiple computers is the most challenging task for the cloud. And because I like to use multiple computers running multiple operating systems, including Linux, Windows and the Mac, that function is particularly important to me.

Helpful and thorough.

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To suggest a link, either add it below or tag it with @gdntech on the free Delicious service.

• Microsoft
• Apple
• Google

The place to talk about games and other things that matter

It's Wednesday.

• Games

Two hackers become the first offenders to receive jail sentences under the 1990 Computer Misuse Act

Yesterday, two bright young men described by a judge as having indulged in 'intellectual joyriding ' were jailed for six months.

Neil Woods, aged 24, from Manchester, and Karl Strickland, aged 22, from Liverpool, thus became the first people imprisoned under the 1990 Computer Misuse Act, introduced to deal with the growth of hacking by a breed of bright young men whose ingenuity was directed towards their computer screen.

Judge Michael Harris said at Southwark crown court, south London, that he would be failing in his public duty if he did not impose immediate custodial sentences.

He told the two men he was jailing them 'both to penalise you for what you have done and for the losses caused, and to deter others who might be similarly tempted'.

The pair worked from home and ran up phone bills of at least £25,000 for other computer users. They were said to have caused damage to systems of more than £120,000.

Their equipment was simple: basic terminals, modems and telephone lines. Their hacking took them metaphorically to Russia, Canada, Taiwan, Singapore, Sweden, Norway, Germany, Iceland, India and Australia. One officer said the list of databases they penetrated was like 'reading an atlas'.

Mr Strickland, a research assistant at Liverpool university, and Mr Woods, a computer salesman and Manchester university computer science graduate, both pleaded guilty to conspiring to obtain telegraphic services dishonestly, and engaging in the unauthorised publication of computer information. Mr Woods also pleaded guilty to causing £15,000 of damage to a computer owned by Central London Polytechnic.

Judge Harris said he accepted their hacking was not designed to damage systems or to make a profit, but he believed they knew what they were doing was illegal.

'If your passion had been cars rather than computers we would have called your conduct delinquent, and I don't shrink from the analogy of describing what you were doing as intellectual joyriding,' he said.

'There may be people out there who consider hacking to be harmless, but hacking is not harmless. Computers now form a central role in our lives, containing personal details, financial details, confidential matters of companies and government departments and many business organisations.'

• Hacking
• Computing
• Crime

First major revamp of Xbox since 2005 integrates TV, internet and gaming in what Microsoft describes as 'rocket-science stuff'

Microsoft revealed a new Xbox console on Tuesday that not only integrates TV, internet and gaming, but also will measure your heartbeat and recognise your voice.

The company said the Xbox One will revolutionise its users' lifestyles by integrating the cloud, voice control and gesture technology into a simple, intuitive machine.

"It changes everything," Marc Whitten, an Xbox executive, told a packed hall of technology journalists at the company's campus in Redmond, Washington. "This is rocket-science stuff."

At the hour-long event in Richmond, Washington, Microsoft unveiled an ambitious vision for the new Xbox. It remains a games machine at heart, but Microsoft's broader aim was clear: to make the Xbox an all-in-one entertainment solution, funneling live TV, video-on-demand and web chat, and allowing users to swiftly and easily move between all three.

The integration with television goes deep: Microsoft announced a deal with the NFL to integrate coverage of the sport with game-like elements such as a Fantasy Football app, allowing viewers to manage their own fantasy sides while watching the real thing in action.

The announcement that Steven Spielberg will be producing a TV series based on the best-selling Halo games, exclusively available on Xbox One, indicates Microsoft sees itself as a content maker as well as a platform provider.

Analysts who had wondered whether the company could follow up on the success of its Xbox 360, first unveiled in 2005, said its successor offered a complete entertainment system designed for the family.

"The Xbox One really looks to advance the state of video game technology and entertainment in a way that we haven't seen before," said Brian Blau, a director of Gartner Research.

"The Xbox One is a real advancement, one that will transform the way we experience TV, games, music, movies and more. From what we can see so far Microsoft has met and far exceeded expectations for the Xbox One. This is Microsoft branching out into the living room to reach more of a family audience rather than a core gaming audience."

Fred Huet, a managing partner at Greenwich Consulting, said Microsoft had thrown down the gauntlet to Sony's PlayStation and other rivals. "The Xbox One is set to mark the beginning of a new generation of games, TV and entertainment."

The Xbox One, which will be available from the end of the year, will be powered by 300,000 servers, more than the entire world's computing power in 1999, said Whitten.

An improved, ultra-sensitive Kinect sensor will track wrist and shoulder rotations and be able to read users' heartbeats. Its main camera can record 1080P RGB video at 30 frames per second.

Microsoft executive Yusuf Mehdi wowed the audience by calling out commands and using minimal hand gestures to manipulate content on the Xbox One. He said "a new set of universal gestures to control your TV" would banish the fumbling confusion many feel with existing remotes. TechCruch called it a "massive, massive upgrade" from the original model.

A "snap mode" similar to Microsoft Windows 8 experience allows users to run two activities – such as watching TV and browsing the internet, or using Skype – simultaneously. It offers a second screen.

The Xbox One has 8GB of Ram, along with a Blu-ray drive, 64-bit architecture and a 500GB onboard hard drive. Microsoft also unveiled a new version of its camera-based Kinect system with better motion and voice detection. It showed how users can watch live sports on TV while getting updates on fantasy leagues on a split screen. In an effort to stay ahead of rivals, Microsoft said new content for the popular Call of Duty game can be downloaded on the Xbox One before any other system.

But Microsoft gave little detail on games, apart from glimpses of EA's Fifa and Madden stalwarts, some shiny cars in Forza Motorsport 5 and a confusing glance at Quantum Break, a futuristic action adventure that appears to mix televisual sequences with gameplay.

Microsoft said more games would be shown at next month's E3 video games conference in Los Angeles.

The previous model, the Xbox 360, was launched eight years ago, and has been the leading games console for the past two years.

• Xbox
• Games
• United States
• Computing
• Gadgets