It's March in 1999 and Sony is a year away from releasing its recently announced PlayStation 2. From a technological standpoint, the PS2 is a peerless powerhouse. Early demos showcase incredible 3D visuals and beautiful animation. Sony talks about modem support and DVD playback. This is the future of gaming, and we haven't seen anything like it.

The+Xbox+would+grow+to+become+synonymous+with+gaming+and+cement+Microsoft+as+a+key+player+in+the+industry.

The+original+Xbox+blurred+the+line+between+console+and+PC.

Xbox+LIVE+was+a+huge+milestone+for+digital+gaming.

Meanwhile, four dudes at Microsoft's Redmond, WA fortress are working on a future of their own. Kevin Bachus, Seamus Blackley, Otto Berkes, and Ted Hase want to create the company's first gaming console. Looking ahead, they see more for video games than higher polygon counts. Their idea would facilitate creative growth, not just fancier visuals. They pitch their idea straight to Bill Gates. Unless Microsoft can do something to differentiate its product from the rest, outdo its competitors, and contribute to the industry in a meaningful way, Gates isn't sure it's a good idea.He hears 'em out.He changes his mind.For the following year, the newly formed console team, joined by Microsoft Game Studios head honcho Ed Fries, talked to developers about what they wanted to do with console gaming. Existing hardware holding back big ideas was a running theme. The conclusion Microsoft walked away with was this: If consoles stifled creativity, games would only see major breakthroughs on the ever-evolving and far more flexible PC. That had to change, and the solution was obvious. Microsoft would build a badass gaming rig and put it in our living rooms.So what would the guts of its "DirectX Box" -- quickly abbreviated to just Xbox -- look like? Microsoft would run it on its own operating system, of course, using the Windows 2000 kernel. The Xbox would also use (and derive its name from) DirectX 8, a suite of special software systems programmers used to talk to the internal hardware. This way, studios familiar with PC game development (BioWare, Lionhead, and Red Storm, for instance) could understand the architecture without much fuss. Ideally, the exciting opportunities of a new platform would also be easy to work with. This is a luxury many new and complex consoles aren't afforded. With the Xbox foundation in place, the remaining hardware specifications became a matter of would make Microsoft's machine-dreams come true.After meeting with many suitors, Microsoft struck a deal with Nvidia, whose audio and graphics components would work alongside an Intel Pentium III core processor. At 733 MHz, the 32-bit CPU had more than double the PlayStation 2's processing power and worked with twice the RAM (64MB rather than the PS2's 32). Add an 8GB hard-disk drive to this impressive set of tech specs and you'd have what's easily the most powerful and able home console conceived. It had all the necessary parts to support its grand ambitions while enabling a stronger visual output than its competitors. The Xbox was born -- now to tell the world about it.Bill Gates took the stage at the Game Developers Conference in 2000 to formally announce the Xbox. He detailed the future of console gaming with the Xbox leading the charge. At the time, online gaming on consoles was both unsuccessful and relatively unknown. The Dreamcast experimented with a modem adapter, but broadband support out of the box, a priority for the Xbox from day one, was unheard of. Downloading additional game content and demos was another foreign concept for console gamers. Storing this media, as well as music ripped from CDs, on an internal hard drive was also new. This was a console, we'd play it on our couch, and we'd use controllers -- but it sure sounded like a personal computer in terms of what it was capable of.It was important to Microsoft that these PC features and standards not overshadow the importance of bringing a brand-new console to our attention. The Xbox design had to look as unlike a PC as possible. After all, Microsoft was a consumer company in addition to a hardware and software corporation now. The prototype model shown at GDC in 2000 was a chrome cube carved into a literal X. It was a dramatic departure from a computer case, that's for sure. Silly though it may have been, it made a clear point: Microsoft's Xbox isn't just another gaming system. Things would be different.Shortly after GDC, Microsoft cemented its commitment to the Xbox with its $30 million purchase of Bungie Studios. Its Halo: Combat Evolved transformed from a Mac/PC third-person shooter to an Xbox-exclusive FPS. Halo would take advantage of the Xbox's expanded hardware to present an action game unlike any we'd seen before. The world would be massive in a way that wasn't possible on other systems. Bungie overhauled the game's engine to better suit its new platform, and it became the platform's poster child. The allure of the Xbox was stronger each day leading up to its 2001 launch.It was hard not to notice the Xbox, really. With a $500M marketing budget, Microsoft wasn't pulling any punches with its new device. Demo kiosks, TV spots, and print ads made up the bulk of Microsoft's marketing materials. 165 companies had been tinkering with some 2,250 development kits, and the future of the Xbox looked bright in their hands. In addition to new IPs like Project Gotham Racing and Halo, Tecmo, Sega, and Capcom showed Japanese support for the platform with exclusives of their own. Munch's Odyssey and Malice demoed well at the 2001 Consumer Electronics Show as well, where Gates unveiled the final Xbox model we'd see in fall that year. By E3, we had a release date, a $299 price-point, and a vague understanding that online gaming would come after what became a monumental launch for Microsoft.November 15, 2001 marked the company's first console release, and Halo, its premier first-party title, shattered software sales records. By the New Year, the Xbox had sold out nearly everywhere and 1.5 million of the big, black crates found their way into North American homes. Halo continued to crush the competition, it was moving full steam ahead. By April it had cracked one million copies sold, and gained a greater than 50% attach rate.(Fun fact: Halo sold 5M units by 2005, which was gigantic. How times change -- in 2011, Call of Duty: Modern Warfare 3 sold 6.5M in its first 24 hours.)With the Xbox exploding, 2002 looked like a hell of a year. The system launched in Europe and Japan, and excitement swelled for Splinter Cell, MechAssault, and The Elder Scrolls: Morrowind. Microsoft made big waves when it purchased Rare, whose Banjo Kazooie and Goldeneye games were arguably the pinnacle of Nintendo 64 gaming, for an astonishing $375M. Oh, and a little sequel called Halo 2 was on the horizon. The industry was buzzing because of Xbox, and it still hadn't even done what it was truly meant to do -- we were still only seeing developers scratch the surface of what great-looking games could really do, and the upcoming online service had only hinted at its potential. Xbox Live was about to knock the industry on its ass.This particular launch wasn't exactly extravagant. At the tail end of August 2002, Microsoft began its Xbox Live beta test. This whole "online gaming" thing was so unfamiliar and unproven on consoles it had to be put through its paces prior to going public. Of more than 100,000 applicants, a lucky 10,000 gained 60 days of early access. Even then, the limited invitations rolled out in small groups over the course of those couple months. It had to be done delicately.Beta testers paid $49.99 for the Xbox Live Starter Kit we'd all see in November. Along with a headset and a year subscription, which began once Live went live, users received an online-only demo of the RC car racer, Re-Volt Live. The Dreamcast port didn't end up on the Xbox after the test cycle. Weeks later, some time in October, participants also received MotoGP and Whacked! demos. These also wound up packed in with the first wave of Starter Kits.