Cowell was asked on a conference call with reporters today (February 22) about his expectations for the groups category on the second season and whether he still thought a group could win the show.
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He said: "When we started the show in the UK, it took a few seasons before good groups emerged. It's interesting that we're talking this week because One Direction, a group who were third on X Factor UK in 2010, are about to literally explode in America."
"There is even a chance their album may debut at number one when it's released. I think that in itself will start making the point that groups can do well in these competitions.
"I stand by what I said in a press conference last year that I think a group can win this show. We're trying to encourage better groups to audition and you'll see a significant difference in the quality of the groups this year, I'm absolutely convinced by that."
When asked what made a group like One Direction stand out from the crowd, Cowell said: "We put them together. I made a decision that they hadn't quite made it or weren't ready as solo artists, and the groups that year, I've got to admit, were terrible.
"We made a decision on the day we should experiment and put these five guys together. They just felt right. The minute we saw them all standing there we had a feeling it would work.
"But to be fair, it all came from them; they had all the ideas, they knew the kind of group they wanted to be."
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He continued: "We gave them a lot of latitude, we never hyped the group or pushed it, it happened in its own momentum in America."
Cowell added: "It does prove the point that I think we're entering a very exciting phase again in pop music and I think One Direction will be huge this year. Importantly for the American show it will attract hopefully the next 'N Sync or Backstreet Boys or Destiny's Child, because there aren't that many groups at the moment doing well in America.
"This is a massive opportunity for them and [allowing groups to audition] does separate us from the other [singing] competitions."
Open auditions for X Factor's second season begin at the Kemper Arena in Kansas City on March 14, while fans can also submit video auditions or try out via MyStudio Recording Booths. Full details of all auditions are available at www.thexfactorusa.com.
One Direction picked up a Brit Award for 'Best British Single' for their track 'What Makes You Beautiful' this week.
Watch One Direction's music video for 'What Makes You Beautiful' below: