The Beginning of Console Wars

By the late 1990s, the video game industry was dominated by Nintendo and Sony. The Nintendo 64 and PlayStation were battling for supremacy in homes worldwide. However, a new challenger was preparing to enter the ring - Microsoft.

In the early days, Microsoft was primarily a software company known for Windows and Office. But chairman Bill Gates had his eyes set on expanding into new frontiers. He saw the emerging gaming industry as ripe for disruption. In 1999, Gates formed the Microsoft Games Division and tasked programmer Otto Berkes with establishing a team.

Berkes began recruiting industry heavyweights like Seamus Blackley and Kevin Bachus. Their mission was to create a console that could rival Sony and Nintendo. However, they faced an uphill battle as total outsiders. Many game developers were skeptical that a software company could break into the cutthroat console space.

In 2000, Microsoft secured a key partnership with DirectX creator Intel. This allowed the new console, codenamed "Midway", to take advantage of Intel's cutting edge processor technology. It would give the system a major horsepower advantage. That year, Microsoft also acquired Bungie Studios to develop launch titles like Halo: Combat Evolved exclusively for the new console.

In 2001, Microsoft unveiled "Xbox" as the official name and brand at the Game Developers Conference. Developers and publishers were impressed by its advanced powerPC processor and ambitious online plans. However, Nintendo and Sony still had massive mindshare with loyal fanbases. Microsoft knew they had to win over third party support to succeed long term.

In 2002, Microsoft began rolling out dev kits and courting key publishers. They secured agreements with EA, Activision, Take-Two Interactive and 2K Games to bring their top franchises like Madden NFL, Tony Hawk's Pro Skater and Midtown Madness to Xbox. This helped legitimize the platform in the eyes of consumers.

On November 15th, 2001 the Xbox launched in North America for $299 - $100 more than PlayStation 2. While the launch lineup was sparse, Halo: Combat Evolved became an overnight sensation. Its visceral first-person action and online multiplayer blew gamers away. Other hits like Project Gotham Racing showed off the horsepower advantage over rivals.

In 2002, Xbox expanded to Europe and Asia. Developers were impressed by how easy Xbox kits made it to program compared to the competition. Within a year, over 1 million units had sold globally. However, Sony's PS2 held a massive installed base advantage with over 100 million units sold already. Microsoft knew they were still the underdog.

In 2003, Xbox launched a key online service called Xbox Live for multiplayer gaming and digital downloads. For the first time, online play was built directly into the console experience rather than requiring expensive peripheral hardware. Launch titles like MechAssault took advantage with robust online modes.

Throughout 2004 and 2005, the library grew with fan favorites across all genres. Halo 2's massive anticipation and sales proved Xbox had attracted a loyal following. Forza Motorsport delighted racing fans with its realism. Fable charmed RPG fans. Project Gotham Racing 2 and Ninja Gaiden proved its graphical horsepower. By the end of 2005, Xbox had sold 24 million units worldwide.

The console wars were now in full swing. Nintendo, Sony and Microsoft battled for market supremacy with each new hardware and software release. New franchises would be born and legacies cemented across all three platforms. While the underdog in its early days, Xbox had proven itself a formidable competitor with a devoted fanbase. Microsoft was now a major player in the lucrative gaming industry for years to come. The stage was set for innovations that would push the entire medium forward.