Despite Problems, Xbox is a Success for Microsoft

Launching in late 2001, the Xbox is the first video game system by Microsoft. It was a disastrous rookie effort in many ways. Research and development for the Xbox cost tons for Microsoft. Not to mention that they spent hundreds of millions on setting up a development core. All their efforts are for none, however, as the Xbox perform well below expectations in the market. Microsoft did salvage several important experiences and products from their first video game system. While it is viewed as a failure, here are a few reasons why the Xbox was also a success for Microsoft.

Partnerships with PC Developers
Before entering the home console market, Microsoft was heavily involved in the PC gaming scene. They were able to use their experience to lure several big PC developers to the Xbox brand. Two of the biggest are Bioware (responsible for the Baldur's Gate and Neverwinter Nights series) and Lionhead Studios (best known for Black & White).

Bioware eventually went on to develop three of the best games on the Xbox brand of video game systems: Star Wars Knight of the Old Republic and Jade Empire on the Xbox in addition to Mass Effect on the Xbox 360. Lionhead Studios created the mega-hit Fable series for the Xbox and Xbox 360.

Xbox Live
Microsoft took plenty of risks with the Xbox. The biggest of which is their push for online gaming in the home console market. While their paid service was mildly successful on the Xbox (thanks mostly to the success of Halo 2), it laid the groundwork to the Xbox 360. As a result, Microsoft was able to get a first-mover advantage over Sony and Nintendo on the next-generation of gaming systems. That particular risk ended up being a successful decision.

Halo
The Xbox often suffers from long droughts of big releases. That may be a blessing in disguise, however. This is because Halo became one of the biggest franchises in the gaming industry as Halo: Combat Evolved and Halo 2 were two of the best and most popular games on the Xbox for the longest time. While plenty of investments end up hurting Microsoft in the pocket books, the Halo series more than make up for some of their mistakes.

Lessons Learned
Finally, Microsoft learned several lessons with the underperforming Xbox. For one, they need to launch their system as early as possible so that it won't be overshadowed. Furthermore, they need Japanese developers in order to succeed on the worldwide marketplace. Thus, Microsoft launched Xbox 360 a year earlier than the Nintendo Wii and Playstation 3 in addition to working more with Japanese developers. Because of their experience with the Xbox, Microsoft was able to perform better with the Xbox 360.