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Since its debut in 2001, Microsoft's Xbox has become a cornerstone in the gaming industry, quickly coming to rival and challenge the market dominance of the Sony PlayStation and Nintendo.
The Xbox brand has evolved through multiple console generations, introducing innovations that have not only influenced competitors but also helped cement Microsoft as a serious player in the entertainment sector.
Starting in the late 1990s, Microsoft recognized the growing importance of the gaming industry and the potential of integrating personal computing into a home console.
Microsoft co-founder Bill Gates was intrigued by the idea of entering the console gaming market, but posed a major hurdle in the beginning. It took months to convince a skeptical Gates to agree to fund the Xbox project, Business Insider previously reported.
A team of engineers led by Seamus Blackley had already started work on the project before it was even presented to Gates. They envisioned a console that could leverage Microsoft's expertise in DirectX graphics technology — hence the code name "DirectX Box," which was later shortened to "Xbox."
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The original Xbox was unveiled on November 15, 2001, in North America. It was the first gaming console produced by an American company since the Atari Jaguar ceased operations in 1996. With a built-in hard drive and Ethernet port, the Xbox was technologically advanced for its time. It introduced the world to franchises like "Halo: Combat Evolved," which became a flagship series for the brand.
In 2005, Microsoft launched the Xbox 360 aimed at building online gaming. Xbox Live, initially introduced with the original Xbox console, was significantly expanded, allowing players to connect, compete, and share content globally. The console popularized achievements and "Gamerscore," incentivizing gameplay and fostering a competitive environment. It also introduced the concept of downloadable content (DLC) for consoles, changing how games could be monetized and extended post-release.
The Xbox 360 S was released in June 2010. Its slimmer design aimed to address the infamous "red ring of death" overheating problem that plagued the original Xbox 360 consoles.
The Xbox 360 consoles saw the rise of the best-selling video game series "Call Of Duty." The series is published by Activision Blizzard, which Microsoft acquired in 2023 for $68.7 billion. DLCs for "Call of Duty" games typically released earlier on the Xbox than the PlayStation, leading fans who wanted to experience newly released content as soon as possible to adopt the console.
After an 8 year run, Microsoft retired the Xbox 360 lineup in 2013 in favor of the Xbox One, which it marketed as an all-in-one entertainment system not just designed for gamers. Microsoft ceased producing the Xbox 360 in 2016.
The Xbox One generation saw a stronger focus on exclusive titles and services like Xbox Game Pass, a subscription-based model offering a library of games for a flat monthly fee. This service-oriented approach was part of a larger monumental strategic pivot facilitated by current Microsoft CEO Satya Nadella. Under his leadership, the company has prioritized investment in cloud infrastructure, which caused Azure to surpass its Windows business and subscription versions of Microsoft Office to amass some 50 million monthly users by 2015.
In a 2018 E3 appearance, Microsoft introduced the Xbox Adaptive Controller, designed to make gaming more inclusive by making gaming accessible to those with various disabilities such as Cerebral Palsy.
The controller, designed to work with both Windows and Xbox One games, gives players with limited mobility large programmable buttons, a single joystick, and easy mounting options to wheelchairs or the player's legs. It also boasts compatibility with headphones and other accessories, including additional switches and buttons. Time magazine considered the Adaptive Controller among the best inventions of 2018.
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The years 2016 and 2017 saw the release of the Xbox One S and Xbox One X, respectively. Both consoles introduced 4K resolution support for games, with the Xbox One X's implementation featuring a 31% graphics performance boost over the original Xbox One.
Building on the success of the Xbox One lineup, Microsoft released the latest two iterations of the console in 2020: the high-end Xbox Series X and the more affordable Xbox Series S. Both systems boasted faster load times, higher frame rates, and support for ray-tracing. With this console generation, Microsoft embraced backwards compatibility, allowing players to play games dating back to the original Xbox console.
Further illustrating Microsoft's heavy investment in cloud technologies, the company expanded the Xbox Game Pass and introduced the Xbox Cloud Gaming beta. Game Pass essentially works as a Netflix-like service for games, allowing players to pay a flat monthly fee to access a large library of games; Xbox Cloud Gaming allows players to play Xbox games on their computers, Smart TVs, or phones — even using a Sony DualShock 4 PlayStation controller if they so choose — through Game Pass' Ultimate tier, entirely removing the need for an Xbox console.
However, despite its success, Microsoft's Xbox division has had layoffs and has not been immune to overall market forces. A major slowdown in video game sales following the end of the COVID-19 pandemic has resulted in job cuts across the gaming and tech industries.
In early 2024, Microsoft layoffs affected 1,900 workers between Activision, Xbox, and Bethesda Softworks' parent company ZeniMax.
Later that year, some Xbox employees took voluntary severance packages, and a further 650 employees were laid off from the Xbox division itself.
