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Microsoft Innovation: Microsoft’s entry into gaming console business with XBOX

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Microsoft Corporation, founded in 1975, is a global technology business in the United States. The firm creates, manufactures, licenses, supports, and distributes computer software, consumer electronics, personal computers, and associated services.

Microsoft Innovation: What led to the invention of XBOX?

It was the year 1999.

Seamus Blackley, a game designer, joined Microsoft in February 1999 to work on Microsoft’s  DirectX. His last big project, “Trespasser,” a dinosaur-shooting game based on Michael Crichton’s The Lost World bombed in the market. He figured he’d keep a low profile as a graphics programmer, but then you never know when the next big idea hits anyone. While travelling on an airplane, he came up with the idea of a video game. He quickly bonded with three other engineers to create a video game console using personal computer technology.

During that time, Sony had just announced its PlayStation 2 console, which everyone at Microsoft, including Bill Gates, perceived as a threat to Microsoft’s entertainment technology for the living room. Resultantly, at a strategic retreat in March 1999, Bill Gates decided to enter the game console business.

Mr Blackley and his colleagues cooked up the Xbox, which hooked up to a TV set but used the best available graphics and microprocessor technologies from the PC. He and his colleagues worked in separate groups. They got the approval early on to continue their project when they demonstrated how such a machine would be easier to use than a PC.

By July, the Xbox team had blossomed into a project headed by hardware chief Rick Thompson, a veteran who knew how to get things done at Microsoft.

However, the development of the XBOX was not a cakewalk. There were internal debates that threatened to derail the project. The team had to resolve disagreements about whether to wait until after Sony’s launch, to include components like a hard disk drive, and to have PC makers build the machines instead of Microsoft. Mr Blackley said he had to deal with intimidating situations like then-president Steve Ballmer yelling, “You’re going to lose the company a lot of money!”

Nevertheless, Blackey mentioned that Microsoft’s culture allowed him to speak his mind and then if he had the best evidence and most reasonable argument, proceed with his plan. He eventually got the go-ahead, and Microsoft launched the original Xbox on November 2001.

“I think I scored a record for the most Bill-and-Steve meetings for a first-year employee. I think I succeeded because I had nothing to lose and had no baggage.” – Seamus Blackley


The original XBOX was the first video game console offered by an American company after the Atari Jaguar stopped sales in 1996. It sold over 24 million units as of May 2006. Microsoft’s second console, the Xbox 360, was released in 2005 and has sold 84 million units as of June 2014. The third console in the series, the Xbox One, was released in 21 markets in total, with a Chinese release in September 2014.

XBOX went on to establish its market share in the gaming console business and has given strong competition to other players since then. All thanks to an idea that an employee came up with in an airplane and a company culture that captured ideas and implement them.

Does your organization also have a culture that embraces employee ideas and implements them? Do you have proper innovation management? If not, what’s stopping you? We can help you with the idea capture part. 

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