It didn't take a lot for Microsoft, one of the richest and most powerful companies in the world, to find a market to compete in where they would be widely viewed as the underdog. Just Sony, another of the richest and most powerful companies in the world.
Three years after launching the Xbox gaming console, Microsoft certainly hasn't achieved dominance, but they are a player. They are the leaders in the online gaming space, being the only company that supports such functionality right out of the box, and at a very reasonable price-- $50 per year. That deal is about to get sweeter with the next iteration of Xbox Live and the Xbox console, called the Xbox 360, which will have a mode called XBL Silver that every Xbox will get for free, as long as it has access to a broadband connection.
Lots of people were involved in catapulting Microsoft from being nowhere in console gaming to being a respectable competitor; but one of them hardly ever gets mentioned in that context.
That man is Apple CEO Steve Jobs.
Now before you start tuning up, let me get my story finished. And to do that, we have to go back to the roots of the Macintosh.
In 1984, Apple released the Macintosh, the computer that was going to save the company and pave the way for the entire computing industry for years to come-- that is, after the Apple III and the Lisa failed to do so.
It was cute. Its entire interface was graphical. It used a cute little mouse to control a cute little cursor. But it cost three thousand dollars. That's a lot for cute.
Those in the industry who saw the potential of the interface mocked it out of fear; the rest just mocked it. They used the word that would be the death knell for gaming on the Mac for years to come. They called the Mac a "toy".
That was one thing that Steve Jobs couldn't have. The Mac was an expensive business machine; he would allow nothing to give the impression it was anything else. So while machines running DOS were safely made playgrounds for gamers because no one questioned the business value of the machines, the Mac had something to prove, and that meant staying out of the sandbox.
In the years immediately following the Mac's launch, Apple had many competitors making computers based on Motorola's 68000 family of processors; Atari and Commodore both had machines, the Atari ST and the Commodore Amiga. Both had color before the Mac did, both had dedicated GPUs long before buying add-in video cards for gaming became de rigeur for hardcore PC gamers, and both were far cheaper than the Mac. Apple had to avoid at all costs having the Mac confused with these machines.
So gaming was never an emphasis for Apple. Of course, the gaming industry exploded; the open nature of the Wintel PC architecture meant a plethora of video cards and peripherals, as well as competing standards for graphics APIs used by developers to make ever-more-impressive gaming worlds. Nothing drove the purchase of new PCs with faster processors, more memory, bigger hard drives like the needs of the next big game. And the Mac simply wasn't part of this cycle at all.
Fast forward to Jobs' second coming at Apple. True to a quote attributed to him in Wired magazine before he came back to the company, he gets going "fixing the Mac" before moving on to "the next big thing" (which, in case you can't guess, was the iPod).
What's wrong with the Mac? Well, lots. Complicated product matrixes, OS cruft, etc etc. And too few games.
Kill your own 3d drawing API (QuickDraw 3d) in preference for the API favored by the undisputed kings of 3d engine development, who just happen to be geeks who prefer to do crossplatform development whenever possible-- Id Software. They like OpenGL, so now Apple likes OpenGL.
Next phase: find the best game developer currently working on the Mac, already working on a killer game that everyone will just have to have, regardless of what platform it is on; let everybody know that these guys used to be mac-first, mac-only, but now they do crossplatform work. Oh, and the games uses OpenGL for rendering, so that matches up nice with the first part. Then, have them show the game to the world first on your stage: MacWorld in New York, where Steve Jobs introduces Jason Jones to show the world Halo, running in real-time, in OpenGL, on a Macintosh.
It's been suggested to me by some in the community that Microsoft really didn't know where the Xbox's real system-seller would come from; that they bought and dealt with as many good developers as they could to build the best stable of games, and Bungie just happened to be one of them.
To that I say: poppycock. The buzz around Halo was already palpable before Microsoft purchased Bungie. The gaming press was aghast, instantly sensing that PC gamers who already begrudged their dependence on Microsoft were now going to have to buy in to Microsoft's plan to control the living room in order to get their Halo fix. Penny Arcade's Gabe was smacking his lips over Halo's "dirty little jeep" before anybody knew what an Xbox was. Microsoft knew full well what they were getting, make no mistake.
Buying Bungie practically off the MacWorld stage may be the most clever and aggressive thing that Microsoft has done in a decade. It gave them what became unstoppable franchise by a rock-solid developer in a popular genre, sci-fi shooters, that up until then was a gaping hole in the console gaming world. It delivered a serious blow to Apple's newfound strategy for focusing on home entertainment: Apple now is a respected leader when it comes to things like music and video, but gaming is no more important to Apple now than it was twenty years ago: you still can't get most of the games that ship for PCs on your Mac, the platform is plagued by ports that are poor or late, and developer support is ebbing just when third parties are trying to force the Mac out of the market: witness recent shenanigans by GameSpy and HAVOK. Who knows what might have become of Mac gaming if Halo had been a Mac and PC release in 2000 instead of an Xbox release in 2001.
Of course, Microsoft was aware of Bungie before that anyway. The series of Myth RTS games was cross-platform, and highly regarded. It had won many awards. But MacWorld gave Bungie and Halo something Microsoft couldn't have done on its own: it gave Halo a credible level of hype surrounding it that it wouldn't have gotten had the game been announced after the buyout. Apple created the hype free of any of the stigma attached to Microsoft, and then the Xbox swooped in and took advantage of it.
Apple showed Microsoft and the world what Halo was, so they would know what to want when their Xbox came out. And Halo made the Xbox what it is today. Clever guys, Microsoft.