Back in the late nineties, Microsoft was worried about Sony's PlayStation 2 video game console, which was slated to launch in 2000.
Prior to the PlayStation 2, video game consoles weren't as significant a threat to the Windows PC. But with their new console, Sony was courting PC game developers, luring them away from making games for Windows with the promise of a growing audience from whom they could command higher prices.
Moreover, the PlayStation 2 was slated to ship with a DVD player built-in. It was viewed within Microsoft as an imminent threat to its nascent efforts to turn cheap Windows PCs into multimedia hubs for the living room.
A computer in every living room
The idea of building a game console to try to head Sony off at the pass was first floated by then-hardware VP Rick Thompson to Bill Gates at a company meeting in 1999, former Microsoft Xbox chief Robbie Bach recently told Tech Insider.
Gates was intrigued, Bach said, but he needed months of additional coercion before being convinced that it was worth the trouble of getting into the famously challenging video game console market.
A big part of convincing Bill Gates was telling him that it was all for the good of Microsoft Windows, former Microsoft software architect Nat Brown tells Business Insider. Brown worked on the console's original team and claims to have come up with the "Xbox" name.
"The way that we sold Xbox originally was that we were going to use the operating system," Brown says.
All about Windows
At the time, Microsoft was all about Windows. Everything Microsoft did was for the greater good of the operating system. Microsoft Office, Microsoft Exchange, and every other product the company came out with was in the name of pushing Windows as the place for developers to make their stuff, from the office to the living room.
By the time that the idea for a video game console was floated in that meeting with Gates, the Xbox project was already underway.
The team behind DirectX, the piece of software that makes gaming work on Windows, had already decided this was the way forward. Indeed, the original name for the project was "DirectX Box," as in, a box for developers running DirectX.
"We were looking for ways to use the OS in more places," Brown says.
The original idea for the Xbox was that it would be a modified Windows PC in the living room, making it super-easy for developers to write their games once for the Xbox and then translate them over to the Windows PC with a minimum of effort. In fact, the very first prototype Xbox console ran Windows 95.
In terms of the technical nitty-gritty, the original plan was a little different than what Microsoft now has planned for Windows 10 on the Xbox One.
But the idea was the same: Make Xbox and the Windows PC irresistible to developers by letting them effectively sell to two audiences for the price of one.
"It was going to be very, very easy to take their next Xbox app and ship it on Windows," Brown says.
Windows was "stagnating"
There were challenges. By the late nineties, Windows was "stagnating," Brown says. Microsoft was richer than ever thanks to the success of Windows 95 and 98. But it hadn't taken any huge steps forward in how it thought about designing the operating system.
If Microsoft wanted to be successful in the living room, Brown's team argued to Gates and the rest of the company's executives, it needed to try some stuff out and rethink its approach.
Just for starters, people in real life hated how long a Windows PC took to boot up — so imagine the frustration of a non-techie trying to turn on a set-top PC and get a game going.
Beyond that, Windows was gaining a reputation for instability, with applications having all kinds of files that depended on each other. When multiple applications needed the same file, you'd get the dreaded "Blue Screen of Death," a system error that meant a crash.
Given that Microsoft was looking to push into the living room and beyond, that first Xbox team assured Gates that whatever improvements they did to make Windows faster and more stable on the console would make its way back into the core Windows operating system used by PCs, too.
WebTV almost ruins everything
A big piece of what they originally came up with was an "isolated" application model, somewhat similar architecturally to how smartphone apps are built today. These Xbox-driven apps loaded up quickly and smoothly.
Gates signed off on the concept, in the name of improving the Windows ecosystem. But this happened just before the reign of future CEO Steve Ballmer, and Gates had started to defer to him on big business decisions.
Plus, there was a lot of trouble getting a lot of Microsoft executives on board with the Xbox, Brown says.
They had no experience with video games. In an effort to understand, a few of them bought the then-current Sony PlayStation and Nintendo 64 consoles, but didn't really grasp how dedicated video hardware differed from the tech that Microsoft had gotten with its acquisition of WebTV, an television set-top box for internet surfing.
Given that a lot of Microsoft employees, including the original Xbox team, were pretty upset at what they saw as WebTV's too-expensive, not-very-good solution, it was immensely frustrating, Brown says.
Bill is "pissed off"
Eventually, after lots of selling, Brown says, Gates and Ballmer gave the Xbox team $500 million in project funding and a blessing.
But a year after the Xbox project was underway, none of the promised code was making it back to the Windows team. And "it made Bill very, very pissed off," Brown recalls.
"There was not a lot of shared code. It's very frustrating," he says.
Still, the case had been made within Microsoft that a games console was a viable business for the company, and work on the project proceeded.
Ultimately, the Xbox would ship without Windows at all, but rather a custom interface that used DirectX. Brown left Microsoft in early 2000, so he doesn't know for sure why they ditched Windows, but he suspects it was just because of the pressures of just getting it out the door and into stores, plus maybe some internal office politics.
The Xbox, released in 2001, would go on to sell 24 million units in its lifespan. That's a drop in the bucket compared to the 155 million Sony PlayStation 2 consoles sold worldwide, but it was enough to establish the Xbox as a viable competitor, which may have pleased Gates after all.
Meanwhile, the Xbox 360, successor to the original Xbox, was led by a different team entirely. It was a massive success, with 85 million units sold worldwide. But it used a PowerPC processor, different from the x86 chips that Windows works with, and so cut itself off from the Windows ecosystem entirely, Brown says.
Xbox One brings it back around
In a lot of ways, getting Windows 10 to the Xbox One is the ultimate fulfillment of that original ambition that Microsoft has been chasing since the mid-1990's: An affordable Windows computer in every living room that people might actually want to buy.
By extending Windows into the living room, it makes it lot more appealing to a wider base of customers beyond just gaming, Brown says, with a selection of apps and software that can run on any TV, anywhere. It's especially important considering that next week's Apple event is expected to launch a new Apple TV with a full-fledged app store.
With a really open platform, Brown says, you get a smart device that's great at everything, so long as developers are working on it. With Apple TV, Apple is bringing its huge iPhone app library, including games, movies, music, and social networking, right to the television.
But by not pushing the Windows platform earlier, Brown says, all Microsoft has going for it is its Xbox games. It's a more limited experience, in a world where the smartphone has opened up the audience for home electronics to everybody.
"Apple's doing it the right way," Brown says.
Microsoft declined to comment for this article and attempts to reach Bill Gates for comment were not immediately returned.