["The fact that the Xbox was even able to survive in such a competitive environment was a victory in itself," says Gamasutra EIC Kris Graft in this retrospective on Xbox's 10th birthday.]

"Xbox is our next-generation video game console that is going to produce games that people have never seen before."

"It'll have the most intense graphics, the most amazing audio, and it'll take the WWF and The Rock and make them look absolutely awesome."

That was Robbie Bach, one of the masterminds behind the original Xbox, speaking from the Consumer Electronics Show, 2001, where pro wrestler Dwayne "The Rock" Johnson participated in some scripted on-stage banter with then-Microsoft CEO Bill Gates about his company's much-scrutinized entry into the video game console business.

Thursday marked the 10th anniversary of the launch of the original Xbox, which hit North American shelves on November 15, 2001 for $299. It was a complicated time of transition for the games industry, and the fact that the Xbox was even able to survive in such a competitive environment was a victory in itself.

Scrutiny In An Uncertain Time

In late 2001, Sony's PlayStation 2, its successor to the massively-popular PlayStation, had already been on shelves for a year in the United States. It was enjoying a nice head start, established developer support and an audience loyal to the PlayStation brand.

The GameCube launched around the same time as the Xbox in the U.S., as Nintendo fought to regain market share that it lost during the N64/PlayStation Era. And earlier in 2001, Sega dropped a bombshell announcing it would be quitting the hardware business, and discontinuing the Dreamcast.

It was a time marked by uncertainty (perhaps typical for the video game industry), and gamers, developers and other industry watchers were understandably dubious about this new venture from Microsoft, which revealed its console gaming plans in March 2000 at the Game Developers Conference.

The scrutiny was warranted. Here was a U.S.-based, multibillion dollar software company planning to go toe-to-toe against Japan's finest game makers. At the time, it looked as if Microsoft would try to pit Flight Simulator and Age of Empires against Tekken, Gran Turismo and Mario.

Rumors about the company's console plans ran rampant. Then when Bill Gates showed off the hardware for the first time at the Consumer Electronics Show in Las Vegas in early 2001, the world found out that Microsoft's vehicle for console gaming domination was an ugly green and blank tank that, with its built-in broadband, hard drive and Windows-derived OS seemed more like the software maker was trying to sneak Windows into living rooms and expand its bread-and-butter PC business.

Of course, Microsoft itself was keeping a keen eye on this scrutiny. A Microsoft-produced feature article (i.e. Xbox propaganda) from 2000 reads: "Microsoft is not concerned with its status as a 'newcomer' to the games console industry. There are always opportunities for new leaders to emerge, and the company recognizes that the video game business is all about the games. From Atari to Nintendo to Sega to PlayStation, it has historically been shown again and again that gamers are loyal to the games -- not to the hardware."

Xbox Advantage

While Sony and Nintendo had expertise in making hardware and creating and publishing games, Microsoft knew its strengths lied in PC architecture, in support software, and in working closely with developers. Making the Xbox familiar to anyone who has worked with PC architecture proved to be a notable advantage for Xbox's developer relations.

One studio that caught the attention of Microsoft was Bungie, formerly of Chicago, IL. In 1999, Bungie impressed a MacWorld audience with a demo of a game called Halo. The game, shown as a third-person shooter at the time, promised network play, vehicular combat and sprawling, detailed environments.

Microsoft, in the later stages of planning its console's launch, was taken aback by the game, and bought up Halo, the studio and its employees, which all ended up moving to Microsoft's Redmond, WA base. Jason Jones, Bungie co-founder and programmer, said on the studio's website, "I don't remember the details exactly, it was all a blur. We'd been talking to people for years and years - before we even published [Halo predecessor] Marathon, Activision made a serious offer. But the chance to work on Xbox - the chance to work with a company that took the games seriously. Before that we worried that we'd get bought by someone who just wanted Mac ports or didn't have a clue."

It was a partnership on which the Xbox's success would hinge, even though there was no way that Microsoft could have known the extent of that at the time. While Xbox may have been mocked early on as a mediocre PC that happened to connect to the television, those PC features -- namely a PC-like architecture, broadband and a hard drive -- allowed PC and Mac developers to easily jump over to Xbox.

Even without Xbox in mind, Bungie's Mac game, with its networking features and graphically-intensive visuals, was already a good fit for Xbox. (Halo came out before Xbox Live, but had LAN capabilities.) In a way, game developers were making Xbox games even before Xbox even came out. The console helped build a bridge between PC game development and consoles, and with that came a rise of Western PC game developers who brought their unique expertise and design mentalities to televisions. Once Bungie helped set a standard for first-person shooter controls on a gamepad, the door was flung open for many other developers.

And it wasn't just Bungie that was on board. "We are very impressed with the technology and are looking forward to creating games that will leverage the power of the system," said former co-chairman and CEO of now-defunct Acclaim Entertainment, Gregory Fischbach in Microsoft press materials from 2000. "We view the advent of the next generation consoles -- such as Xbox -- as a tremendous opportunity to grow our business."

Mitch Lasky, former EVP of Activision also gave a statement of support at the time: "Xbox provides us with a familiar tool set for development, which will give us an advantage in delivering state-of-the-art game experiences to consumers."

And luckily for PC gamers, these console plans would absolutely not interfere with PC gaming support, as former Microsoft Games division marketing director Don Coyner said, "The PC and Xbox are complementary devices. Each has very distinct audiences. PC games are more cerebral, while console games are more visceral. If you look at the top 10 games lists for these two platforms, you'll see that they don't really match up." (Of course, this would change several years later as Microsoft shed a number of internal studios, including PC game developers.)

Secret Weapon And Gamers' Games

As more details about Microsoft's Xbox plan began to emerge, the company started to become more convincing in that it wanted to make a games console, not a PC for your television, although even in 2001, it seemed a bit odd to have a broadband connection so close to the tube.

"Our secret weapon for Xbox is its online game capabilities," Robbie Bach said in 2001, prior to the Xbox's launch. "It's the only console designed from the ground up to be perfect for broadband online gaming. And that is the future of gaming."

Other video game console makers were aware of the coming broadband revolution, but it's the timing of which no one, not even Microsoft, was certain about. Between the PS2 and the GameCube, it was Microsoft that went all-in on broadband, and built up Xbox Live, the network service for Xbox gamers that would become easily the biggest distinguishing feature for not only the original Xbox, but also its successor, the Xbox 360.

On November 15, 2001, Microsoft launched the console in North America with a lineup that included Bungie's Halo: Combat Evolved, Bizarre's Project Gotham Racing, EA Sports' Madden NFL 2002, Oddworld Inhabitant's Munch's Oddysee and Tecmo and Team Ninja's Dead or Alive 3, among others. If anything, the launch titles showed what kind of audience Xbox was going for -- call them "hardcore," but these were gamers' games. Microsoft appeared to have a strategy here.

The Xbox's holiday launch was solid enough, as Microsoft said it would ship between 1-1.5 million consoles to North American retail through the holidays. Retailer Electronics Boutique enthused that the "incredible" Xbox launch broke single-day sales records.


Microsoft's Xbox never did "beat" Sony's PS2, which became the best-selling home console in history with around 150 million units sold and counting, compared to the now-discontinued Xbox, which topped out at around 24 million units by the time Xbox assembly lines shut down in 2006. But the Xbox did eke past GameCube's 22 million in sales, an achievement that would've been unthinkable just a few years prior.

Xbox didn't topple the industry leader, but it laid the groundwork for Microsoft's Xbox 360, which launched in 2005 and continued with technological innovation in software, hardware and networking that one would be hard-pressed to deny. Particularly, the Xbox was a major influence on the direction of networked console gaming across the entire industry.

But it wasn't just innovation that kept the Xbox afloat. The amount of money that Microsoft was willing to dump into its games business played no small part in Xbox's survival. The Xbox launched in 2001, and Microsoft's Entertainment and Devices didn't turn a quarterly profit until holiday 2004. The Xbox division was earning a reputation as a successful money-loser until it turned its first annual profit in 2008.

It's no wonder that around Xbox 360's 2005 launch, former Xbox VP Peter Moore was saying, "It's a marathon, not a sprint." Luckily for Microsoft, its runners are powered by copious loads of cash rather than energy bars. Either way, Microsoft stuck with a product that it believed in -- or perhaps the console's audience had hit such a critical mass, that the company had no real choice but to continue believing in it, despite the losses.

That exchange between Bill Gates and The Rock in the early 2000s, as artificial and cheesy as it was, did exhibit one thing: Microsoft, at a high level within its corporate structure, knew what kind of audience it was going for. You can see evidence of this with the early Bungie acquisition, the early publisher partnerships for launch titles, the specifications of the Xbox hardware itself, and the celebrities that it paid to pump up the console. Maybe Microsoft was playing heavily off of gamer cliches, but its strategy worked, attracting the 18-34 year-old male demographic.

It's not a strategy that all game developers should take, aiming for the "hardcore audience." But when you're a console maker, it's about defining the audience, listening to it, and configuring all-important developer relationships to suit those market demands. Microsoft aimed deep, and didn't rush the initiative to aim wide. Focus is why the Xbox business was able to survive to see a second iteration. And of course, tons of money didn't hurt either.

So nice work Microsoft. And happy birthday, Xbox.