Speaking to Game Informer magazine, Gabe Newell suggested that Sony should scrap plans to release PS3 and develop an entirely new system.

“The PS3 is a total disaster on so many levels, I think It’s really clear that Sony lost track of what customers and what developers wanted,” said Newell. “I’d say, even at this late date, they should just cancel it and do a ‘do over’. Just say, ‘This was a horrible disaster and we’re sorry and we’re going to stop selling this and stop trying to convince people to develop for it.’”

Newell reserved special praise for the Wii, which he said would outsell Microsoft’s Xbox 360 by next Christmas.

“The happy story is the Wii,” he added. “I’m betting that by Christmas of next year, the Wii has a larger installed base than the 360. Other people think I’m crazy. I really like everything that Nintendo is doing."

Newell is a co-founder of Valve, which made its name by developing the multi-award winning Half Life and Source engine. More recently, it’s become equally known for its Steam digital download service, which has attracted publishers including EA, Activision and Take 2 to sign up.

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In December, the firm signed an in-game advertising deal for Counter Strike with IGA, which was billed by the two companies as one of the biggest of its kind.