PlayStation 4 is one of the fastest-selling consoles of all time, and Microsoft knows it. But the person in charge of the Xbox division isn’t letting that hold him back.

Phil Spencer took the stage at the GeekWire summit earlier this week, and he admitted that the PlayStation 4 has an enormous lead over the Xbox One. And when asked if the Xbox could catch up, Spencer answered honestly.

“I don’t know,” the Xbox boss said. “You know, the length of the generation — [Sony has] a huge lead, and they have a good product.”

PS4’s dominance came up as Spencer addressed how the current console-gaming market took shape. A huge part of that came as the result of early decisions that Microsoft announced regarding the Xbox One and then reversed after fans voiced their concerns.

Spencer pointed out that he was part of the team that made those decisions, and now that he’s the one in charge (after taking over for Don Mattrick in March 2014), he wants to take responsibility for those mistakes while also pushing forward with a new direction for Xbox.

“For me, what I think we most fundamentally lost was the trust of our most loyal customers,” said Spencer. “Whether it was always-online or used games — whatever the feature was — we lost the trust in them that they were at the center of our decision-making process.”

Spencer said he noticed that gamers were asking themselves whether the Xbox One was a product for gamers or a product for Microsoft.

“As soon as that question occurred to people, and they looked at anything — the power of our box, microtransactions, our launch lineup — what you find is you lose the benefit of the doubt,” said Spencer. “You lose your customer’s assumption that what you’re making is to delight them and not to just make a better and maybe more manipulative product.”

And that cynicism toward Microsoft wasn’t just from its critics. Spencer said that it hit him repeatedly how much trust Xbox had lost throughout the launch window of the Xbox One as even the most diehard fans were expressing their outrage.

“We had people with ‘Xbox’ tattooed on their arms, and they were coming to us — almost in tears — because they felt the direction we were going with the product didn’t include them.”

Of course, Microsoft has, famously, reversed all of its most unpopular decisions regarding the Xbox One. When it launched, it did not have an always-online requirement and it did play used games. About a year after launching, under the leadership of Spencer, Microsoft then cut the price of the Xbox One from $500 to $400 (after dropping the packed-in Kinect camera) and then down to $350, often bundled with a game.

And those moves have helped, but Xbox One’s first impression still lingers.

“I feel really good about the position of the product and the brand,” said Spencer. “But I was at the GameStop managers meeting about three weeks ago. And I was sitting with about 5,000 GameStop managers in Las Vegas, and they’d come up and tell me that they still have customers who think the Xbox One won’t play used games.

“That perception gets set early on,” said Spencer. “Because consumers have five seconds to internalize your message and brand and then they move on. They aren’t going to take time to read what you say afterward. And regaining that trust is incredibly difficult.”


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