A Jump Into Crowded Waters With the Xbox

At the turn of the century, Microsoft and Bill Gates realized that the company really, really wanted a piece of the video game market. Gates built buzz for the Xbox for over a year before unveiling the console at the Consumer Electronics Show in Las Vegas in January 2001. By the holiday shopping season, gamers all over America wanted them, launching a three-way battle for video-game dominance between the Xbox, Sony’s PlayStation 2 and the Nintendo GameCube. More than 1,000 people lined up in Times Square to snag the first Xboxes at midnight on Nov. 15. Microsoft had a $500 million marketing budget for the game platform, which also contained a hard drive and Internet connectivity. The Xbox was more powerful and more expensive — not to mention heavier — than the PlayStation 2, but lacked Sony’s stable of popular games — it didn’t take off as a platform until the stunning success of Halo, a mankind-vs-aliens space opera that helped redefine the first-person shooter genre. The next year, Microsoft launched Xbox Live, a paid subscription service allowing gamers to play with opponents all over the world. In 2005, Microsoft launched the Xbox 360, which sold out of countless stores before Christmas. But Xbox faces a challenge to its dominance from an old competitor: Nintendo’s new Wii console. Earlier this fall, Microsoft cut the price of the Xbox 360 to $199 for the cheapest model to undercut Sony's latest PlayStation ($399) and the Wii ($249).