When Microsoft threw their hat into the ring with their XBox, derisive snorts from the playerati were all over the place. How could Microsoft, a software company, make usable hardware? How could they whip together a game studio that could compete with the stables that Sega, Nintendo and Sony had developed? When they first released their giant controller, howls of laughter pealed across the internet. Surely Microsoft would be out of the gaming business within two years, three years tops.
However, there were a few things that people forgot. Microsoft had already unified software developers with the DirectX platform. The basic underpinnings of a console were already there: It just need a computer to run on, and that's what the XBox was. Second, Microsoft had been making hardware for years, with the Sidewinder game pads being the de facto standard for PC gaming for a while and Microsoft keyboards and mice being solid equipment. Therefore, it wasn't a huge stretch to make something a little more complex. Lastly, Microsoft has money. Gobs and gobs of the stuff. If they want to be successful at something, they will be.
The success started with Halo. Halo isn't exactly a great shooter. In fact, it pales in comparison to some of the other shooters that were gracing the PC, like the No One Lives Forever series, Half-Life, Counterstrike, the Thief series, and the Medal of Honor games. However, it did a few things very well: Unique, realistic-handling vehicles, good physics and easy-to-set-up online multiplayer. The first two things could have been done easily on the PC, and they have. The third was what really revolutionized console gaming. The Dreamcast had done online gaming over dialup speeds, but what Microsoft did changed things.
The weird thing is that PC makers had been trying (and failing) to make a unified place for online gaming for years. They tried with Kali, Battlenet, Steam, and GameSpy, among others. None were really sufficient, so gamers had to make due with expensive private servers and different usernames. It was all right, and it wasn't necessarily a bad thing, but this was the next step. It took Microsoft to accomplish what no other company could, and that's what changed gaming.
Their competitors reacted in different ways. Sega gave up. Sony tried decentralizing multiplayer gaming. Nintendo tried sidestepping the issue and avoiding it. However, it was inevitable. The people had spoken, and they liked this brave new multiplayer world, where you didn't have to make sure that the servers were working before connecting, didn't have to download 50 custom sound files in order to connect to a server, and were able to keep track of your friends in one place. The die was cast. Nintendo was even begrudgingly forced to admit their mistake and try and include some semblance of online multiplayer in their next console.
One area of concern for Microsoft is their inability to break into Japan's market. So far, they've only sold 3 millions units in Japan of the original XBox and the 360. However, that's not a huge deal. The Japanese are big spenders, but Japan's gaming market is also shrinking. They're not as big a deal as they used to be, and if Microsoft decided that they were just going to forget about Japan, they wouldn't have any appreciable profit loss. The cost of shipping and marketing in Japan is probably negating any net gain that they would have gotten from selling their consoles, but Microsoft is stubborn and will probably keep plugging away until they've broken the market there.
Either way, Microsoft has accomplished something pretty startling in the space of 10 years. They went from industry laughingstock to innovator. They've done it by cannibalizing the PC market, but the PC market was on its way out anyway. It'll be interesting to see what the next 10 years hold for them.
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