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astrosmash said: 

I have no idea if the word "crush" was ever used.

About the time PS2 was launching Sony exes were constantly saying in interviews that the Playstation was going to own the livingroom; it would be the device that did everything - games, movies, internet. (here's an example ) It was widely speculated at the time that this was a huge threat to MS (because if a playstation did all that and cost a fraction of a pc - who would want a pc?). Shortly thereafter MS announced the XBox.

 

http://www.amazon.com/Opening-Xbox-Microsofts-Entertainment-Revolution/dp/0761537082/ref=sr_1_1?ie=UTF8&s=books&qid=1229827624&sr=1-1

I believe that book is the primary source of information for what you're talking about. Apparently the author has access to inside information. I've never read it myself, but from what I've heard, it supports your position. (That is, one of Microsoft's primary goals in entering the console industry was to preemptively attack Sony.)