Microsoft’s Xbox game console business generates $16 billion in annual revenue. When the product was a concept, it was nearly killed in its cradle by Microsoft co-founder Bill Gates.
At a meeting of Microsoft executives before the Xbox launch, Gates tried to stop the project from moving forward.
Xbox console co-founder Ed Fries revealed that at a meeting 18 months before the Xbox’s launch, Fries and his team showed Gates and Microsoft co-founder Steve Ballmer an idea for a “personal computer” that resembled a The idea of a video game console. Another team wanted to make the Xbox a traditional game console, rather than running on Windows.
When he learned that the console would not run on Windows, Gates was so upset that he almost canceled the Xbox project. Gates called the launch of an Xbox console without Windows an “insult” to everything he had done at Microsoft.
Ballmer, for his part, expressed concern about abandoning a project that had already cost so much money.
Frys said that the mention of rival Sony in the meeting led Microsoft executives to reach a consensus and bring the Xbox to market. It was mentioned that Sony has the potential to become a competitor to Microsoft and that it is becoming more and more influential in the home entertainment space. After Sony was mentioned, Gates and Ballmer signed a release agreement for the Xbox.
Last fiscal year, Microsoft Xbox revenue reached a record $16.28 billion, up 17 percent year-over-year, with content and services revenue up 8.8 percent and hardware-related revenue up 63.3 percent.
The Xbox game console was released on November 15, 2001, sparking intense competition between Microsoft and Sony. The first Xbox sold more than 24 million units, and the Xbox 360, released in 2005, did much better, selling more than 80 million units.
It’s hard to imagine what Microsoft would have done without the Xbox. If no one had mentioned Sony and its potential dominance of the console and home entertainment market, the Xbox might never have emerged.