Original subtitles

The idea that Microsoft could ever compete with Sony or Nintendo...

Microsoft is going to make a game console?

It was seen as a bit of a joke.

Might as well call it "Nerd Box" right?

We needed to prove our credibility.

This thing is going to be the most badass thing you can imagine.

Dude, we need a metal X and it's gotta have a green eye,

you know, shooting a laser out.

I want it to blind people.

Game developers are not gonna be tolerant of any level of at all.

I opened up the first machine,

like, what the f... Oh my God, like what happened in there?

Seamus is backstage soldering

as the auditorium is filling up.

And it's in front of the boss! The boss is coming on.

The Microsoft brand is on the line. The Microsoft name's on the line.

Bill's not gonna be happy.

And it was terrifying.

He's screaming at us, "You guys have lied to me,

you guys have like played me for a fool."

He says, "This is a insult

to everything I've accomplished at this company."

It was terrifying. I thought my career was over.

There's a new contender in the video game wars.

Xbox is going to be the future.

Truly the future of video games.

Xbox. Taking over the living room.

Limitless, connected digital entertainment.

You guys never understood.

The company is going to face fierce competition.

Sniper! Nooo!

It's a ticking time bomb.

It makes me very nervous to actually play this for you.

Xbox, getting a major overhaul.

A bold vision for the future of gaming.

It's the Xboooooooooooox!

Meet the Microsoft mouse line.

There's a mouse for everyone,

whether you're an expert or a first-time buyer.

Let's start with the basics.

I joined the hardware group back in 1987.

I ran it for 13 years,

hired 300 people into the group

and by 1999 we were doing 600 million dollars' worth of business a year.

Rick was working for me running our hardware business,

think mice, keyboards, we had some speakers.

We had this thing called Interactive Barney.

That's super-de-duper!

At some point Steve Ballmer shows up and says,

"Rick's gonna go do this business exploration.

I want you to help sort of supervise and support him."

Steve Ballmer tells me Xbox is my new job

and is very convincing about it.

Having been in hardware all of my career at Microsoft,

I need to understand how this is going to be a good business for us.

Do you ever want to make hardware?

If you want to be a great software company you have to be only a software company.

You can't dabble in in other things.

The idea of building a game console from scratch.

The risk here was enormous.

We really understand what it is to be gamers,

but we're panicking, like we have to figure out how to build the hardware.

We had no idea what we were doing.

None, like couldn't have been less qualified to build a console.

Everything about making a console is hard.

Including taking an upfront loss on the hardware.

Sony, Sega and Nintendo, they design their own hardware.

They manufacture it themselves

and they sell it at a loss and make a profit on games.

That's how the business model works.

So for Microsoft, that is an insane business to get into.

Our P&L said we were gonna lose 2 billion dollars

for the privilege of maybe later on

somewhere way down the road we'll make money.

And once you started it with all the commitments that you make

trying to convince the game developers to make Xbox games,

you can't really stop it.

What have you done? What madness has claimed you?

We made it a point to Steve Ballmer to say,

"If you guys start this thing,

don't come back six months from now and say it hurts too much."

Any new console hoping to have even a chance of success

needed to win over a group of notoriously tough critics...

Game developers.

And getting past those gatekeepers

would require Microsoft to make a flawless debut

at the world's largest game developer conference, GDC.

Games sell consoles.

And so in order to sell consoles,

we had to win the hearts and minds of the developers.

The only place I think we could have ever announced Xbox was GDC.

The next GDC would take place in March of 2000,

so the Xbox team had only 11 months

to design and deliver a functioning prototype.

Time is running out for Microsoft to get on the board.

If they didn't announce by GDC 2000,

they were going to be ceding too much of the playing field to Sony.

They had to do it.

And there was still one massive problem to solve.

Who was going to build the console hardware?

The plan had never been for Microsoft to do it alone.

The only way that we could actually get Xbox made properly

was to go to the people that were really good at building hardware.

Rick was trying like hell to find somebody to partner with us,

people who had expertise that he knew we didn't have.

Companies like Dell and Compaq and NEC and Toshiba.

We'd start these meetings and most of the guys would look at me and go,

"Who are you and should I believe you or not?"

And I'm like, "No, no, no, really, really we're gonna do this."

And the OEMs all, you know, laughed in his face.

Like we understand enough about the console business

to know that all the money is made on the software.

And you're coming to us and asking us just to make the hardware

while you make the software? We're not that dumb.

Rick's point of view was we have no chance of doing this ourselves.

And so then the question became how do we partner with Nintendo,

or maybe we should partner with Sega.

Sega seemed like a natural choice

because of Microsoft's previous collaboration on the Dreamcast.

But there was pushback against the partnership.

Dreamcast had never been competitive with Sony

and Xbox needed to be unlike anything Microsoft had tried before.

That left one last great hope.

With Nintendo 64-bit technology, now Mario lives in a 3-D world

and you can make him go wherever you want.

As we began to understand the business model,

we really appreciated Nintendo.

People don't buy consoles, they buy games.

They want to play Mario, they wanna play Pokémon, they wanna play Zelda.

Accepting the award for Ocarina of Time

will be Shigeru Miyamoto.

You look at Nintendo and you find the Spielberg

of the video game industry in Miyamoto and you go, "Wow this guy's unbelievable."

Thank you, thank you very much.

I knew I could convince Microsoft to outright buy Nintendo.

I mean it would be an amazing accomplishment

because it's a national treasure of Japan.

So if you buy Nintendo, you get credibility in the Japanese market.

You maybe even get Miyamoto.

Was there a way to make that happen,

because that would give us instant credibility.

If Microsoft were to acquire Nintendo, they would have gotten two things.

One was the hardware and second is a massive games portfolio.

From Rick's point of view, if you could acquire Nintendo,

you would immediately have access to the best game library in the world, full stop.

So I made an introduction to the people that ran Nintendo of America,

told them what we were interested in and then we made a trip to Kyoto.

And who do you think you are, barging into my office?

But I could tell from the first meeting that there wasn't a chance

this was gonna happen, they were highly skeptical.

Guards!

They were like, not even remotely interested in selling the business.

I never got past square one on trying to acquire them.

That to me is the pivotal point for Xbox.

Oh my gosh, we're actually gonna do this ourselves.

And that scared the crap out of us.

Because once it became a do-it-ourselves project,

now the Microsoft brand is on the line, the Microsoft name's on the line.

It's going to be big and public.

We're gonna have to do a lot of things new,

we're gonna do hardware at scale.

We are no longer in the Microsoft playbook.

An unprecedented challenge

called for some changeups and new additions to the team.

Ted, Nat and Otto left for other pursuits,

while Thompson brought on someone new,

someone known within Microsoft

for delivering complex projects against impossible deadlines.

One day this guy comes into my office and he sits down

and I'm like, "Who are you?"

And he says, "I'm J. Allard." I said, "Who's J. Allard?"

And he looks at me like, "Everybody knows who I am, right?"

We're really on the cusp of this digital entertainment revolution.

So while for 25 years now Microsoft prided itself

on making the world more productive,

now our challenge is to blend that with making the world less productive,

you know?

He was seen as a futurist that had a lot of credibility internally at Microsoft.

There was you know, the famous Internet memo.

He sent Bill Gates this memo that basically said,

"Hey Bill, we gotta wake up.

'Cause this thing called the Internet is coming and it is going to transform

commerce, it's going to transform society, and it's going to be powered

by broadband connections."

And so we made a huge bold bet by putting a broadband connection

in the back of the Xbox.

Everybody thought we were nuts.

You have to remember back in 1999

less than 5% of the U.S. households even had broadband.

But I remember J. saying, "We're going to bet on the future, not against it."

He had a vision for where online gaming could go and what Xbox could become

and Bill paid attention to J.

It's very hip to be on the Internet right now.

With the right team together, Xbox needed the right operating system.

And that was a little tricky... and political.

It's just amazing how popular PCs are.

Windows had been the catalyst for Microsoft's meteoric rise.

Games, word processors, calculators, calendars,

all running faster than ever.

Bill Gates had been won over to the team's pitch

on the understanding that Windows would power Xbox.

But the team knew that Xbox needed to be leaner than a PC.

Windows was an all-purpose tank. Xbox needed a street racer.

One of the things that makes Windows great is that you can do lots of things at once.

You can be running Word next to Excel next to IM next to Photoshop.

And so the idea was

if we're gonna put a video game console in the living room,

it's gonna run Windows.

Once or twice a week

we'd get pings from all sorts of different groups around Microsoft.

Office was kind of the notorious one,

saying, "Hey I hear we're doing a console. I hear it's gonna run Windows.

What do I have to do to get a build of Office running on it?

I bet people would like to edit their Word documents while sitting on the couch."

What's the rating of this?

Do I, I think, so...

We had to do two things, one, we had to tell these groups to off.

That is not what this is.

If you actually think people want to sit back on their couch doing spreadsheets,

it's not going to happen.

At the same time, we needed a lot of code from these groups.

So we had to tell them to off nicely.

You're dismissed.

The services that Windows provides are really valuable,

but the most important thing for games is speed.

If you have an operating system taking 15% of the CPU

and half the disk, you're dead.

One possible solution was to use just the Windows NT kernel,

essentially the brain of the operating system.

This would leave more space and flexibility

for developers to program games.

There was just one problem with that solution.

The Xbox team didn't have access to that kernel

and the Windows team wasn't about to share it.

Here we are in the computer room that holds all of our server machines.

If we'd have gone and asked the Windows team,

they would have insisted that we take Windows as is,

no modifications, subject to their approval,

and we just could not bring that baggage over.

So we had to steal it. We stole it. We stole it, yes.

I have it running on this machine here.

We actually grabbed it at night

off of the server when no one was looking,

about three weeks before a major Windows release was going to happen.

We brought it back and just started hacking and slashing stuff out of it.

We had to refactor and cleave off functionality to make this box so tuned

that the games could be brilliant.

What started out as a four and a half megabyte

working set for the kernel, got that down to about 200k.

So a tiny, tiny, tiny fraction of what Windows is actually made it over to Xbox.

You could call this the evolutionary approach.

It becomes clear that what we're going to do

is not what Bill and Steve thought they had approved.

Xbox would have the heritage of Windows but not actually Windows itself.

The new operating system was streamlined,

but nothing like the Windows-powered version

the team had pitched to win the technology bake-off against Windows CE.

With GDC 2000 just one month away, for Thompson and the team

it was the moment of truth.

Time to call one final meeting.

A do-or-die presentation

to Bill Gates on Valentine's Day to ask if he could open his heart

to a Windows-light version of Xbox.

We had to go to Bill and tell him

what he wanted most out of this, he was not going to get.

This wasn't going to run Windows.

I can't imagine how it could be better.

Oh [BLEEP], Bill's not gonna be happy.

This was the final meeting

to either approve the Xbox or cancel it.

One of the highest stakes meetings I was at my whole time at Microsoft.

Which is the Valentine's Day Massacre.

It's like a 4:00, 4:30 meeting.

Rick Thompson, myself, Ed Fries, J. Allard are the 4 Xbox folks there.

Steve's there.

And there was a whole outer group of people too,

so this room was packed.

About 15 minutes late, Bill walks in.

He's holding the PowerPoint presentation

and he walks up to the table and he throws it down on the table and he says,

"This is a insult to everything I've accomplished at this company."

Leans across at me and says, "Why are you trying to kill Windows?"

"You guys have lied to me. You guys have like played me for a fool."

I start to try to argue for this,

why we can't have the normal version of Windows.

Bill doesn't want anything to do with it. He doesn't want to hear it.

He yells at me, he shuts me down.

And you got a lotta alphas in the room and all alpha males

and so there's a lot of pounding the table and, "You're wrong, I'm right."

By then J.'s up, he's ready to fight, and so then J. goes in.

Then Robbie tries to talk to Bill.

And Bill yells at Robbie.

If I'd had glasses on, I would have needed windshield wipers on them

because he was spitting at us so hard and so fast.

Bill would yell at us for a while about these different things

and then Ballmer would take over on the business case

and the business case looked terrible.

By now, and the reason it's called the Valentine's Day Massacre

is 'cause all Valentine's Day activities are now off.

The candles at home are melting.

You know we're all missing dinner.

And the meeting gets to this sort of crescendo

and I said, "Okay well then let's not do it.

We haven't announced anything."

So that led to another hour.

And then somebody says, "What about Sony?"

Microsoft had owned the den and the office.

How cool!

And the thought of Sony

owning the rest of the home is offensive to Bill.

But the Xbox, it's the antithesis of everything that Microsoft is.

It takes all of the hardware burden onto us

so it's really hard to make business sense of it.

That's equally offensive.

And what's going on with Bill and Steve

was figuring out which of those was least offensive to them.

Bill kind of pauses and he thinks

and he says, "I think we should do this."

And Ballmer's like, "Yeah we should do this."

And then they started getting excited and starts going back and forth,

"We should do this, we should let these guys do this."

Bill was like, "Okay,

we're gonna give you guys everything you ask for.

We really want you to be successful on this project.

You have all my support."

And that part of the meeting took five minutes.

And I turned to Robbie and I'm like,

"Robbie, that was the weirdest meeting I've been in in 15 years at this company."

All I remember is Kevin Bachus coming by

and basically saying, "We're doing it, we're doing it!"

The system was gonna get built.

Hundreds of millions of dollars would be spent marketing it.

Even Ballmer said, "Once we say yes to this, we're saying yes to this.

This is real. This is as real as it gets right now.

We're going to book the speech at GDC."

Bill Gates was going to go on stage in front of the world and announce it.

And it became very real when Rick Thompson sent an email

saying that Xbox had been approved for an initial funding of a billion dollars.

With a billion dollars on the line and less than a month left until GDC,

Xbox's big debut had more riding on it than ever.

The team set to work creating a prototype

and recruiting game developers to the platform,

a monumental task for a software company that didn't have much street cred.

When it came to console gaming in the late 90s,

there was no perception of Microsoft.

They weren't in the picture.

But when it came to the PC side of gaming, Microsoft had a reputation.

Ed Fries had built Microsoft Game Studios

and kind of organized the studio structure by genre.

We had like a roleplaying studio, we had a sports studio.

We were doing golf, we had a basketball title

and we had a baseball title.

But it was around the time we shipped Age of Empires

that we started to really get respect.

AGE OF EMPIRES You've built a glorious empire!

It was just a beautiful game. It was beautifully scored.

Age was a great game, it was a ton of fun, everyone loved it.

GEORGE PECKHAM:Age of Empires is a grand franchise,

but if you talk to somebody that likes to play Super Mario Brothers,

it's really kind of a different customer entirely

and I think that they didn't necessarily view Microsoft

as being in the gaming business.

Here we go!

To recruit console game developers to its unproven platform,

Microsoft had to innovate development tools

that would rival the competition, making game developers

an offer they couldn't refuse.

We were all about what we were giving

the game developers to work with to create the greatest games ever made.

The PS2 was a really, really unfriendly environment to developers.

Seamus Blackley and Kevin Bachus and Ed Fries,

they were saying, "We're gonna fix this,

so more of the money is going on the screen,

not just trying to figure out the convoluted hardware."

And that was like, really? I mean, it was like oxygen.

This was gonna do things that the PlayStation can't,

which meant to me we could tell more stories,

create characters that people care about,

and create worlds that would be very difficult to do on the PlayStation.

It's time!

We know at this point we're heading toward an Xbox announcement at GDC.

Game developers have to be excited,

so that they could talk to their other friends in the games industry

and tell them, "You know what? Xbox is legit."

The innovations offered in the Xbox created a promising future

for console game developers,

but to deliver that future, Microsoft still needed to complete

a working prototype to debut onstage at the Game Developers Conference.

When Microsoft first started talking about doing a game console,

everybody's willing to listen, but you need to see it.

We had to create a prototype game console that was obviously not gonna be

the final design of the hardware because we didn't know what Xbox

was ultimately gonna look like, but at the same time look nothing like a PC.

I had started working with the hardware guys' rapid prototyping group,

which was literally in the parking garage.

And they had like built a temporary structure

in a bunch of parking spaces and like made it like a little office.

So I went to this area where the artists were

and they were having a remote-controlled car race in the office.

Around the desks, going "eyweyu," running around.

And that's how I met Horace Luke.

In a lot of ways I work very scatter mind.

I don't really work on a linear path.

Most of my day is spent with markers and paper and just doodling.

I remember the guys coming in about six or seven in the evening

when everybody was leaving the office with this big motherboard from the '90s,

this gigantic board that had all these PCI slots on it.

And they said, "Put this into something

that is presentable on stage."

And I still remember staring at it going, "What do I do with this thing?"

The traditional Microsoft product was very ergonomic-centric.

The mouse, the keyboard, but with the Xbox it was very different.

It was about storytelling.

And there's a lot of people focused on what's this set-top box

gonna look like in my living room?

But that wasn't what we cared about.

Horace was really interested

in what was happening when you got sucked through that screen.

The role of the designer, it was how to tell the story at a glance.

That Microsoft is about to go into a space

that is brand-new to what Microsoft was accustomed to,

telling people that this thing is going to be the most badass thing you can imagine.

I would go down to visit Horace and there would be scraps

of prototype drawings and other pieces of vision work that he would have.

The whole idea was this nuclear reactor almost,

trying to hold this energy that's inside that is so intense.

He's like, "Dude we need a metal X and it's gotta have a green eye

you know, shooting a laser out!"

And he's always gonna use sound effects,

so he was gonna be like, "pccchow," "pshhhh", "chccck!"

"I want it to blind people!"

Because that's kind of how Horace would talk about these things.

That sense of escape and that sense of capability

and power was what we trying to create with this green portal,

and inside there everything is possible.

That was how we wanted people to feel when it's onstage.

You could have shown up to GDC and plugged in a PC

and tried to tell people it was a console,

and not a single person in that audience, I don't even think we would have believed

that that was really going to be a console.

So we knew we needed to show something beautiful.

People gotta be able to tell, in an instant,

that this thing is called Xbox.

What we ended up building was a 40 pound,

machined, aluminum X that had been buffed to a chrome finish.

These big, beautiful, shiny chrome Xs.

They were like these incredible sports cars.

We ended up taking a, literally a solid hunk of aluminum

and carved it with a six-axis CNC machine.

That box took two weeks to carve and one week to polish.

Building those metal Xs was... very trying.

Drew and I just after work, you know, get a can of kerosene,

get a rag and just keep buffing it.

Rub, rub, rub until that thing was polished.

Somebody brought it out into a meeting and took a towel off of it

and showed it to us and I was like,

"That can't be in people's living rooms."

And everyone was like, "Calm down it's a concept."

And I'm like, "Okay, awesome about the green eye.

How am I gonna fit the components in there?"

And what we ended up doing is if you look at a PC,

there's like this main motherboard so we stuck the motherboard at this,

you know, on like one angle.

We had to shave off the edge of the motherboard

because it just didn't fit.

We soldered the hardware together ourselves

and borrowed space in the lab.

You know, I'm sure people looked at that and they were like,

"Whoa, it's like this polished X, it's got this you know amazing green eye,"

but it was the world's messiest PC build.

Like it was components like just jammed in there

and you're like, "Is it gonna work?"

"Oh well, it worked this time.

I guess that's the one we'll take with us to GDC."

It's sometimes possible to forget about the people

who actually make the games.

And so we're here in San Jose, California

for the Game Developers' Conference to remind ourselves

that without these people we'd still be playing checkers.

Announcing Xbox at the Game Developers' Conference

was like every Christmas morning rolled up together.

Video game developers are upping the ante on creating realistic games.

Microsoft ups the competitive ante, announcing a new concept codenamed Xbox.

At GDC, the idea was that Seamus would go on

and basically be the demo guy, talk about Xbox, show the demos.

But this was the first time that Seamus

had stood in front of an audience of game developers and gamers

since the launch of Trespasser.

Before he came to Microsoft,

we knew Seamus from his stint at DreamWorks on Trespasser.

It was a personal passion of Spielberg. He was very involved in it.

I'm in Steven Spielberg's office, and we're gonna do a game

that could be a spiritual successor to Jurassic Park

that takes all of the principles of game design

that I thought were important.

Seamus really hit on this idea

of trying to use physics to simulate a world populated by dinosaurs.

I wrote a big physics system in order

to make an island that was completely physically simulated.

And then he's saying, "Every leaf

and every branch that you walk into in the woods is gonna move."

And that was kind of a dream that we're like, "Yeah that sounds good.

but how are you gonna do that, you know, how are you gonna make that perform?"

Well, the end of the story was we're not.

And I made every mistake in the book.

You can read about this online,

all the stupid things I didn't manage in that project,

and we shipped it before it was done.

We shipped this broken game right into the jaws

of the birth of Internet gaming sites and the first fan sites.

I personally just got destroyed online,

and I had never seen anybody destroyed online.

We know what that's like now. I thought my career was over.

Everyone who was present in San Jose

at the Game Developers' Conference, they knew my failures with Trespasser.

I remember sitting in my hotel room and I had to convince myself

to just go show my face at this thing.

And it was terrifying.

The day of the unveil of Xbox, I took 3 Xboxes with me,

like these metal Xs, one for the stage

and then two for as like, you know, what happens if we, if this fails?

We hand carry these things down in transit

because these things are fragile.

The idea was showing live demos,

proving that we actually had nothing up our sleeves.

The game developers are not gonna be tolerant of any level of at all.

All the things on the screen were specifically to show game developers

that this Xbox was far and away better

than any of the other consoles that they'd ever seen before.

And they have to be done in such a way

where it's clearly interactive, clearly real,

clearly running on the hardware as advertised.

We hand carry them down.

We set them up, we turn them on.

The first one doesn't work.

I opened up the first machine like,

I'm like what the is going on here,

like something jiggling around that wasn't quite right

and you're like, "Oh my God, like what happened in there?"

So then we set up the second one, it doesn't work either.

And the third one, none of them work.

Seamus is backstage soldering, trying to get everything ready

as the auditorium is filling up.

He was looking on the verge of green, he just looked sick.

You know, I was like, well maybe this is stage nerves,

but then I realized, you know, well maybe it's also because

all of our demo machines were completely deconstructed.

We're panicked out of our minds

because Seamus went on stage

to talk to the most cynical audience in the entire world.

If you took a photo from the stage of GDC,

you would see, you know, gamers and game developers

and they'd all look very excited

but underneath that layer are, you know, the most critical people you've ever met,

waiting to hate that thing that you created.

Kevin was underneath the stage

with a video switch box that could switch from the Xbox prototype that was onstage

running the demos to one that Drew was standing backstage doing everything

the same way I was doing it so Kevin could switch

between the two of them in case it crashed.

And it's in front of the boss, the boss is coming on!

I'd like to ask Seamus Blackley to come on out and give us a look.

And then somebody decided we're gonna make him put on

a special leather jacket that doesn't really fit him!

We don't have the box but we do have the leather jacket

so we're ready to go.

Well, we do have one box. This is our showbox.

So now, as I walk out on stage with Bill G.,

the full weight of my failed game, Trespasser,

all of my dreams in the game industry,

the ridicule that I thought I was gonna suffer

at the hands of every game developer

who saw me fail to deliver this great thing,

all of that pressure came to bear.

I get up there and I run the first demo.

What I'm gonna show you now is an example

of advanced lighting techniques that are possible under DirectX 8.

We made a bunch of little toys that sat around your desk

like a little merry-go-round with dynamic lights.

Complicated shadows drawn across very complicated objects,

there's reflections, there's environment mapping going on,

and all this is happening at full hardware rates.

Another great example of that is our water demo.

You could now see caustics on the bottom of a pool.

All those things come from the power of processing

on a per-pixel basis

and that's really what the big differentiator was for Xbox.

This demo took I think a day to get running.

And I can't underscore the importance of that enough.

This takes Xbox from being a programmer-driven console

to being an artist-driven console, to a design-driven console.

And that's really at the heart of the entire program.

The demo, it had a joke in it.

There's a classic Microsoft picture in the background.

Oh yeah baby, that's texture resolution right there.

These were really smart demos and really ambitious.

But when we saw the physics demo, and I was like, "Wow, how is that computing?"

In my high school physics class I was scarred with the image of chain reaction

as demonstrated by the old ping pong ball and mousetrap demo.

Physics was something that everybody wanted to do.

Seamus had tried physics with his Jurassic Park game,

and it didn't work so great.

But now you were seeing those ideas actually working right.

A great example of the CPU

doing all of this collision, all of this physics at the same time

that the graphics processor is rendering the scene for us.

Physics is cool!

The Raven and Robot video, you could see the photorealism.

The huge chrome robot that basically was motion captured

by a female character called Raven.

The level of physics simulation that was happening there,

how much the CPU was being taxed,

you knew as a developer this thing was really, really powerful.

I was like, "Wow we have got to get onto this box."

I was very surprised by the Xbox.

I was expecting it to be kind of cool, kind of like a stripped down PC

but what I wound up seeing very much excited me.

These demos were instrumental

and so critical to the importance of Xbox and people believing in it.

To get honest, candid feedback from our peers,

it was exciting because we saw the enthusiasm for Xbox.

We knew that we had accomplished something.

Xbox is really gonna be the king of the game stations.

This is like a PlayStation 2 on steroids.

People were kind of giving us high fives, saying congratulations,

and I'm like, "Did we actually do this?"

I've never seen so much advance

in one particular piece of technology before. Ever.

From that moment on, we had credibility with publishers

and with game developers,

because it was clear we did know what we were talking about.

And the next thing that mattered was

that Bill Gates showed up for it.

That signaled to the industry, and to the rest of the world,

Microsoft as a company is backing it with all of its might.

- Thank you very much. - Thanks.

Despite all the fanfare surrounding Microsoft's Xbox, industry analysts

say the company is going to face fierce competition.

When Sony's newest video game console, the PlayStation 2,

went on sale in Japan earlier this week,

consumers were frenzied with excitement.

They snapped up nearly a million units

at $370 apiece in the first three days alone.

We were at a disadvantage compared to Sony or Nintendo

because we didn't have the legacy of building fun.

And Sony, you know, oh they're movies they're cool, they're awesome,

and Microsoft is like they wear khakis and they're boring

and they're Office and they're Windows and it's like...

For over a year, the team had referred to the top-secret new console

only by its code name, Xbox.

But now they had a chance to christen it with a bold new name,

one that wouldn't evoke Microsoft's corporate image.

Naming is the worst part of marketing. It's the hardest thing.

Nobody ever 100% loves the name. Ever. Ever

Marketing would go to the same brand people that they would use

for naming components of Windows,

people who knew nothing about games.

We paid hundreds of thousands of dollars

to go through the most rigorous system of naming,

tested against all the right customers,

and they came back with list after list.

We had hundreds of names that were generated.

Frixion.

Psyclipse.

And they were epically terrible.

Norbo.

Infini-D.

Zod, X-O-D.

Shock Factor. Oh my God.

Fire P... Fire Plug?

Questria.

Vybe, with a Y.

Xantra. Xantra is absolutely a blood pressure medication.

Vrontier.

Og. O-G.

Velvet.

Xig Xag.

Zimulate.

You see anytime you're naming something,

you have to play the kindergarten game that everybody plays with their children,

you know, "Okay I'm going to give my child this name.

Now how are people going to butcher that their first day of school, right?"

Carpet Ride?

I was having conversations with Robbie about,

"You know Robbie, Xbox is a really good name."

"No, you can't call it Xbox, that's a code name.

We don't name products code names. We need a new name."

It's like, "Okay we'll look again,"

and so we'd look again and come back,

"Xbox is a pretty good name."

I remember our final meeting with the naming experts.

They came in with the perfect name.

"We've tested this extensively and it's a winner.

We tested it against the name Xbox, it blows it out of the water."

"Great, what's the name?"

With great fanfare, they unveil...

11X.

You know, 'cause it goes to 11?

Well, it's one louder, isn't it?

Eleven.

I looked at the marketing people, the marketing people looked at me,

and they said, "All right, we'll get on Xbox."

Where can you go from there? Where?

- I don't know. - Nowhere. Exactly.

There was a big debate internally about whether we should call it

the Microsoft Xbox or just Xbox.

We did a lot of blind research

where we would bring in gamers, ask them questions

about what should the role of the name Microsoft be on this console?

First response when we mentioned Microsoft was they rolled their eyes.

"A video game console from Microsoft?"

What? Microsoft?

Doing a console?

First of all, it would take forever to boot up

and then it would probably blue screen.

And then we asked them questions like,

"Hey, if PlayStation were an animal, what animal would it be?"

"Oh, it'd be a lion, the king of the jungle."

"If Microsoft were an animal what would it be it be?

"It would be a spider, it could kill you, but you also just want to step on it."

If the name Microsoft smothered the brand, it just was going to be a nonstarter.

The idea that Microsoft could ever compete

with Sony or Nintendo or even Sega was seen as a bit of a joke.

Might as well call it "Nerd Box," right?

Bill Gates was the richest man in the world.

They were such an important tech force,

but what they weren't was in the living room.

They weren't an entertainment company.

Among gamers, 0% of people believed we could do it.

I was a journalist and I thought,

"I don't know how Microsoft is going to make a console worth [BLEEP]."

Can you imagine walking up to Bill like,

"Hey, you know what the biggest liability I have in my new product launch is?

The name of your company."