Xbox

Bill Gates saw the PlayStation 2 as a threat to the PC business. In 1998, four engineers from the DirectX team proposed a console built from PC parts: an x86 processor, an off-the-shelf graphics chip and a hard drive. The project, codenamed Midway, clashed with the WebTV team, which wanted a cheaper, closed appliance. After tense meetings, Gates and Ballmer approved it in February 2000. The name came from shortening "DirectX Box".

Gates announced the console at GDC in March 2000, and Microsoft bought Bungie that summer, making Halo an exclusive. The console was unveiled at CES in January 2001. Just before that, the engineers switched from an AMD processor to an Intel one. It launched in North America on November 15, 2001, at $299, in Japan on February 22, 2002, and in Europe on March 14, 2002. Each unit sold at a loss, and the price fell to $199 in April 2002.

It was the first console with a built-in hard drive and it had an Ethernet port. Xbox Live opened on November 15, 2002, and required broadband. Halo, Project Gotham Racing and Dead or Alive 3 drove the launch. Splinter Cell, Star Wars: Knights of the Old Republic, Fable, Ninja Gaiden and Halo 2 followed. Sega signed an 11-game exclusivity deal. In Japan it failed because of its size and a library aimed at American players.

Microsoft announced the Xbox 360 in May 2005. Nvidia stopped making the GPU that August, ending production, and the console was fully discontinued in 2006. The last game, Madden NFL 09, came out in August 2008, and Xbox Live support ended on April 15, 2010. Microsoft lost over $4 billion on it, but hits such as Halo 2 helped popularise shooters and online console gaming. Some of its games run on Xbox 360, Xbox One and Xbox Series consoles.