Update: We've spent more time playing with the Xbox One at PAX Prime 2013 in Seattle. We've added additional impressions and hands on photos.
There's more to the Xbox One than meets the eye. Sure, Microsoft's E3 2013 press conference revealed a price that was higher than the PS4, and then Sony's media briefing brought down the house by making fun of its rival's insistence on daily check-ins and used games-crippling DRM.
The good news for Microsoft is that while all of the E3 theatrics were an unwanted distraction, the Xbox One console and its games provide serious next-generation innovations that no one else is doing right now.
The result is a number of "Why hasn't anyone thought of that before?" Xbox One features. From the so-far-superior Kinect camera to the live TV integration, Microsoft's system feels as if it isn't beholden to the past.
It's a forward-thinking system, and sometimes that's a bit jarring.
Okay, Xbox One is forward-thinking everywhere but its chassis' boxy design. Compared to the Xbox 360, the new system typifies "It's what's on the inside that counts." Yes, Xbox One is a walking cliche.
The polished front of the console contains only a slot-loading disc drive that replaces the flimsy disc tray that current generation gamers have had to deal with on the Xbox 360. It also plays Blu-ray discs now. On both counts, Microsoft is catching up with PS3.
Where Xbox One surpasses even Sony's new machine is on the backside. While the minimalist front of the console contains exactly zero ports, the rear is filled with eight.
The most exciting of those eight connections is the HDMI In. This is where Microsoft makes the Xbox One truly an "all-in-one" device. When combined with the HDMI Out, this input port allows for pass-through technology that can take over a cable box signal. And we're talking real live TV, not some hokey app with a smattering of day-old TV shows.
Gone are the days of having to constantly switch inputs to flip between video games and TV. Now, with the Xbox One's triple-layered operating system, flipping back and forth is as easy as saying "Xbox, TV" and "Xbox, game."
This instant switching functionality is built into the new Kinect, which is finally a camera sensor that Microsoft's legion of core gamers are going to enjoy using. Furthermore, while the Xbox One is more expensive, it comes with this 1080p Kinect out of the box.
Sony has finally admitted that its similar PlayStation 4 Eye is being sold separately. That means more people are going to have a Kinect plugged into the console at all times. Only a fraction of PS4 gamers are likely to pony up for the PS4 Eye.
If 100 percent of Xbox One owners have a Kinect, more developers are going to take advantage of its next-generation functionality and make their games compatible with the sensor. Contrast that with the bound-to-be lower install base of Sony's camera add-on. It would naturally be less appealing in the eyes of developers if only a fraction of PS4 owners opt to buy the PS4 Eye.
Microsoft was also willing to share what the new Kinect can do, while the PS4's dual camera sensor remains somewhat of a mystery.
The smarter, more sophisticated sensor can process a whopping 2GB of data per second and track up to six skeletons at once. Microsoft's much-hyped Time-of-Flight technology also measures the time it takes photons to rebound off of a person or object.
This translates into a sensor that looks and feels much less like a toy when compared to the Xbox 360 Kinect controller.
Xbox One controller
Microsoft's real controller improves upon its eight-year-old predecessor thanks to subtle changes - changes that could maintain its status as console gamers' standard-bearing gamepad.
Of the more than 40 innovations that Microsoft literally puts in the hands of its Xbox faithful, its refined dual analog sticks are the most important. Not only are these two joysticks sleeker and smaller than the ones on the Xbox 360 controller, both contain a grippy micro-texture.
Sony may have been able to copy Xbox 360's dimpled thumbstick approach having seen its effectiveness in the last eight years. However, it didn't know to make the edges of its DualShock 4 texturized until May 21.
Another area in which Microsoft stands alone is in its unique idea to add impulse triggers to the Xbox One controller's left and right analog shoulder buttons. Not all Xbox One game demos have implemented this new technology, but the system's tech demos prove that it's a worthy refinement to the rumble concept that hasn't changed since its debut in 1997.
If you're used to the weight of the Xbox 360's wireless controller, with its set of AA batteries, the Xbox One's controller will feel lighter. The new controller now uses a proprietary battery pack, rather than disposable garden variety cells.
Microsoft has taken a great idea from Sony's PS3, letting you plug the controller into the system to charge. This also serves as wired connection, meaning we may have seen the end of the non-wireless option, unless Microsoft decides to produce a cheaper option.
Our hands-on time with the DualShock 4 proves that Sony's gamepad is extremely enjoyable as well, and even leaps-and-bounds better than its DualShock 3 controller. Microsoft's changes are more subtle. The Xbox One's face buttons are slightly closer together for faster button-pressing and its trigger and bumper buttons are larger to the point in which they touch each other.
The Xbox One controller's changes aren't as revolutionary, but that's because Microsoft had tweaked its gamepad to near-perfection in the last generation. It's even more comfortable now, and with new contoured handles that fit a wider variety of hand sizes, more gamers' should be able to enjoy it.
Xbox One games
Games for Xbox One were finally shown off at E3, proving that the console is more than just an all-in-one multimedia hub. Ryse: Son of Rome gives Microsoft its long-overdue answer to Sony's epic God of War series thanks to its brutal, Crytek-engine powered graphics.
It's ironic that such a brutal game can look so good. Ryse's framerate is butter smooth. Playing it for the first time is like your first look at a high framerate movie; it's almost too smooth. The effect can be momentarily surreal.
Another high-fidelity in-house game is Forza Motorsport 5. Demoed by developer Turn 10 Studios, it laps Sony's PS4 racer DriveClub in terms of visuals. The game also has a unique feature in which it can learn and mimic your friends' tactics with "Drivatars" that aim to make single-player a thing of the past.
Like Ryse, Forza's gameplay is beyond smooth. It's 60 frames per second, the gold standard on consoles set by the Call of Duty series.
The game's lighting is especially impressive, from the way light that gets in your eyes on certain turns, to the way the sun plays on the metallic body of cars.
There's also an impressive level of detail to each vehicles. Any collision or more subtle impact you take during a race will be reflected by your car's ruined paint job at the end of a match.
Xbox Live Arcade games are also continuing in the next-generation, even though Xbox 360 titles remain locked to the old console. At E3, old favorites like a Killer Instinct reboot from Rare are joined by whacky, new ideas like LocoCycle from Twisted Pixel Games.
Microsoft is also publishing Dead Rising 3 as an exclusive title, hoping that a horde of zombie-loving gamers will wander over to its side of the Xbox One vs PS4 console war. The game's open-world environment is enticing, after all. Combine Dead Rising and Dead Rising 2 and then double the size, and you've pretty much have an idea of how vast the worlds is in Dead Rising 3.
Let's not forget an exclusive Halo game, an Xbox One version of Minecraft and Kinect Sports Rivals - which will look to take advantage of the improved Kinect functionality and build on the 360's original hit.
Microsoft is touting the size and scalability of its next-generation games as proof that cloud and internet connected gaming isn't just a requirement, it's a necessary evolution. Offloading the system's processing power to Microsoft's server gives developers the ability to create better, more complex games.
Xbox One doesn't have that Halo 5 launch title as a killer app, but what it does boast is horsepower to make its game and entertainment experiences that much better. Even the company's first-party titles look as if they're able to compete with Sony's in-house software without having to be named Halo of Gears of War.
With Microsoft having already sold out of pre-orders on Amazon, early adopters of technology and its Xbox Live-loving diehards are already going to pony up the $499 (£429) on day one. The question remains whether or not the company can convince everyone else that these benefits outweigh some of the negative spin that's been thrown its way.