The original 2001 Xbox and accessories.

When Sony’s PlayStation 2 threatened to make the Windows PC obsolete, Microsoft countered by releasing the Xbox on November 15, 2001. Of course, the Xbox didn’t run Windows or use standard PC hardware either. Here’s how that happened.

The DirectX Box: Countering a Sony Threat

To understand Xbox and its origins, you need to understand a little bit about its backstory at Microsoft. In 1996, Microsoft introduced DirectX, an API that made it easier for game developers to write graphics-intensive games for Windows. Instead of having to write graphics routines at a high level, detached from hardware (which affected performance), or target every type of GPU card specifically, DirectX provided a uniform way of programming for a variety of graphics cards from different vendors. DirectX arguably made Windows a viable game platform for the first time.

For at least 30 years, Microsoft’s company mission was to put a computer on every desk and in every home—running Microsoft software, of course. In the 1990s, Microsoft’s success grew to amazing heights thanks to products such as Windows 95 and Microsoft Office, both of which made the company a household name. It seemed like the company was on the right track.

During the same time period, Sony was flying high from the success of its PlayStation console. In 1999, the press widely reported that Sony’s upcoming PlayStation 2 console would be a “post-PC trojan horse.” Sony planned to turn its next console into a family entertainment hub that could potentially replace the PC in the home. Understandably, certain people within Microsoft were worried. If you combined different elements from Sony’s plan—including a DVD-playing game console with network connectivity and a DVR with a hard drive—Sony’s system could potentially pose a threat to Microsoft’s mission statement and its bottom line.

The Sony PlayStation 2
A threat from the Sony PlayStation 2 inspired the Xbox. Evan Amos

A group of Microsoft employees—Otto Berkes, Seamus Blackley, Kevin Bachus, and Ted Hase—who worked on DirectX within Microsoft decided that the firm should counter this threat by making its own game console—a “DirectX Box.” Initially, they planned to make a slimmed-down Windows PC hooked to a TV set that ran games installed off of discs. The group approached Ed Fries, the head of Microsoft’s game publishing division. “They knew they needed content for it,” said Fries in an interview with How-To Geek. Fries saw an opportunity to grow Microsoft’s gaming market share with a new console, and he jumped aboard the movement to make the console a reality within Microsoft.

While the group floated the idea for a console around in Microsoft, a rival approach emerged that would use embedded chips and Windows CE, similar to a WebTV set-top box. After a showdown between the two factions, the Windows approach won out with Microsoft management.

The Original Xbox on-screen interface.
Instead of Windows, Xbox featured a custom OS with a fancy but simple interface. Microsoft

But, after a while, the Windows console team realized that the full-PC approach wouldn’t make sense. To make a lean and efficient console with a low enough cost, they’d have to cut Windows out of the equation. Moreover, the team’s estimates showed that the Xbox project would operate at a loss of almost a billion dollars over time.

They had to present the bad news to Bill Gates. After a tense, hours-long meeting with a livid Bill Gates and Steve Ballmer on February 14, 2000, Gates and Ballmer decided to go ahead with the revised console plan that would make the device more appliance-like and less like a Windows PC. The loss would be worth it, they all decided, if their console could disrupt Sony’s play to conquer the PC.

But the move wasn’t just about Sony. In the long run, there was potential money to be made. Fries, who left Microsoft in 2004, describes the console industry as one of the rare billion-dollar businesses that was worth Microsoft’s time to explore. “This business was big enough, it was big enough to care about. That’s one reason I think the company’s still in it,” says Fries.

Not long after the fateful February meeting, the “DirectX Box” became the “Xbox.” It ran a custom lightweight OS that shared some shreds of code with Windows, but it was basically its own beast. Within 20 months, the Xbox team, led by Robbie Bach, delivered a shippable product.

A Console Built Using PC Technology

Microsoft built the Xbox using tech similar to a Windows gaming PC of the time. It featured a PC-like architecture with a northbridge, southbridge, and an x86 CPU. It also included a hard disk, Ethernet networking, and a 3D graphics chip from Nvidia. Here are some detailed specs on the original Xbox:

  • CPU: 733 MHz 32-bit Pentium III
  • RAM: 64 MB, shared between system and video memory
  • Removable Storage: DVD-ROM (4.7 GB single-layer or 8.5 GB dual-layer discs), memory card
  • Internal Storage: 8 or 10 GB 5200 RPM 3.5″ PATA hard drive
  • Graphics:  233 MHz Nvidia GeForce 3-based NV2A GPU
  • Networking: 100 Mbit Ethernet
  • Controllers: Four ports, modified USB

Notably, the Xbox brought some firsts to the console gaming space. It was the first console to ship with a built-in hard disk, and also the first game console with an integrated Ethernet port. (Although Sega offered a Broadband Adapter swap-out for the Dreamcast’s modem in 2000). Xbox also featured extensive online play support through Xbox Live, which launched in 2002.

The 2001 Microsoft Xbox console with accessories.

Like the PlayStation 2, the Xbox’s DVD-ROM drive allowed it to play video content as well as games. With an IR remote control accessory, you could turn the Xbox into a handy DVD player.

The Xbox shipped as a relatively large console unit, which was one of the largest ever made up to that point. (Few know this, but the plastic for the original Xbox console and controllers was a very dark green, not black as commonly thought. It’s almost a secret nod to its all-green branding.)

The original Xbox "Duke" controller.
The original Xbox “Duke” controller. Microsoft

In America, the Xbox initially shipped with a relatively large and complex controller (commonly nicknamed “The Duke”). It featured 10 buttons, two analog triggers, twin analog sticks (themselves both buttons as well when pushed down), and a D-pad. Each controller featured two slots that could hold a memory card or accessories such as a headset attachment.

In testing before the Xbox’s Japanese launch in 2002, Microsoft found the controller felt uncomfortably large for smaller Japanese hands, so they designed a more compact “Controller S” type gamepad that would later ship as the default model for the Xbox worldwide.

Halo: An American Console Killer-App

Since 1986, the American game console market had been dominated by Japanese consoles from Nintendo and Sega. Notably, the Xbox was the first American-designed game console since the Atari Jaguar in 1993. Fries says this fact resonated with Microsoft staff during the Xbox’s development.

In particular, Fries enjoyed the opportunity with Xbox to shine a spotlight on western-style game genres, such as first-person shooters, in the console space. “It wasn’t so much about like the flag-waving of being Western,” says Fries, “But it was about bringing the Western development sense, the Western style of games, to the market that had been really dominated by a Japanese style.”

Part of that strategy resulted in the development and release of Bungie’s Halo: Combat Evolved, which launched alongside the Xbox as a then-uncommon AAA first-person shooter on a home game console. Microsoft acquired Bungie in 2000 while Halo was in early development, which proved a key strategic move for Microsoft.

The cover for Halo: Combat Evolved for Xbox.

“[Bungie] packed so much into that game, and they had so little time to develop it,” says Fries. “They had split-screen four-player PvP. They had Co-Op campaigns—you could go through the campaign with a friend which most games even today don’t do. They had network multiplayer, even though Xbox Live didn’t exist, you could still network your consoles together and play.”

In many ways, Halo defined the dual-analog stick first-person shooter that is commonplace today. Between the impressive story, great graphics, and varied play modes, Halo attracted scores of fans, becoming a huge success and a must-have reason to own an Xbox. “It’s really the reason that Xbox is around today,” says Fries. “I don’t think we would have continued if it wasn’t for the success we had with Halo.”

More Great Xbox Games

With a library of 996 games, the Xbox proved to be much more than just a Halo box. It played host to brilliant originals (Oddworld: Stranger’s Wrath), high-quality ports from consoles like the PlayStation 2 (the Grand Theft Auto series), and some amazing ports of PC titles such as Doom 3, Return to Castle Wolfenstein, and Morrowind.

A Morrowind Xbox image.
Arguably, Morrowind on Xbox provided the deepest console RPG experience up to that point. Mobygames

Here’s a short (and incomplete) list of some of the best and most highly-regarded Xbox games.

  • Halo: Combat Evolved: The aforementioned dual-stick FPS.
  • Halo 2: The sequel to Halo. It sold over 8 million copies.
  • Burnout 3: Takedown: A high-stakes, arcade-style racer.
  • Fable: A colorful action-RPG set in a lush world.
  • Forza Motorsport: A realistic racing sim, exclusive to Xbox.
  • Jade Empire: A deep action-RPG with mythical Chinese elements.
  • The Elder Scrolls III: Morrowind: A first-person action-RPG with a massive open world.
  • Crimson Skies: High Road To Revenge: An aerial combat game with a storyline.

There are dozens of other amazing Xbox games out there, which has made it popular with collectors who like to seek out hidden gems in the console’s catalog.

Launch and Legacy

Microsoft unveiled the Xbox console design at CES on January 6, 2001 in a playful presentation featuring Microsoft Chairman Bill Gates and Dwayne Johnson (“The Rock”) in his pro-wrestling heyday.

After launching on November 15, 2001, the Xbox broke North American console sales records, selling 1.5 million units by the end of the year. Overall, the Xbox came in second place in total sales among the competitors of its generation, selling over 24 million units worldwide versus the Nintendo Gamecube’s 22 million and the Sony PlayStation 2’s mammoth 155 million in sales.

One of the Xbox’s weaknesses, according to Fries, was that it wasn’t easy to make a cost-reduced version of the console. Microsoft didn’t own the intellectual property in the chips (such as the CPU and GPU) that would have allowed it to combine them into cheaper integrated and potentially second-sourced silicon, reducing the price of the console over time. Also, the hard drive added a lot to the total cost. So Microsoft always sold the original Xbox at a loss.

An Xbox promotional poster from 2001.

In fact, Fries says one of the primary goals of the Xbox 360 (2005), which began development just after the original Xbox’s launch, was to make the next Xbox cheaper to manufacture over time. “The whole idea of 360 was actually to cut off the life of the original Xbox as quickly as possible. It was only on the market for four years,” says Fries. “To introduce a new machine that we would beat Sony to the market with, for the next generation, and that was cost reducible—that was the real goal of 360.”

In that regard, the Xbox 360 fared spectacularly, keeping neck-and-neck with the PlayStation 3 sales numbers throughout its generation. With its follow-ups, the Xbox One and Xbox Series X and Series S, it’s clear that the Xbox brand is here to stay. It all started with a bulky, capable console with a lot of spirit way back in 2001.

Happy birthday, Xbox!

Profile Photo for Benj Edwards Benj Edwards
Benj Edwards is a former Associate Editor for How-To Geek. Now, he is an AI and Machine Learning Reporter for Ars Technica. For over 15 years, he has written about technology and tech history for sites such as The Atlantic, Fast Company, PCMag, PCWorld, Macworld, Ars Technica, and Wired. In 2005, he created Vintage Computing and Gaming, a blog devoted to tech history. He also created The Culture of Tech podcast and regularly contributes to the Retronauts retrogaming podcast.
Read Full Bio »