Xbox celebrates 20th anniversary

Yahoo Finance's Dan Howley joins the Yahoo Finance Live panel to discuss the

Video Transcript

ZACK GUZMAN: Welcome back to "Yahoo Finance Live." If you want to feel old, here's something to maybe look back on, maybe celebrate if you are a gamer or know a gamer in your life. The Xbox launched almost 20 years ago. Just think about that, 20 years.

I remember my first one. I had "Halo" and everything. But we are taking a look back on what exactly Xbox means as a sector-- as a piece of the business there at Microsoft. And Yahoo Finance's tech editor, Dan Howley, joins us now with the latest in terms of the look back on Xbox. Dan.

DAN HOWLEY: That's right, Zack. We talked to Robbie Bach. He is the former head of Xbox, the Xbox chief as he likes to be known. And, really, we discussed the 20-year anniversary of Xbox coming up in November and the fact that they didn't even know if the original Xbox would actually get out the door and be sold to consumers. Take a look.

ROBBIE BACH: I'm going to turn 60 this year, so you sort of say, wow, I started when I was 40. Now I'm 60. But I think as I reflect back on it, the big implication for me is how far we've come technologically. It's easy to forget when Xbox launched, the big controversy was, wow, they're betting on broadband. I wonder if that will work.

Just think about that. Think about what's happened on social media. Xbox Live, oh, they're going to bet on people being able to talk to each other over the internet. Those were big bets at the time, and now we see where it's brought us technologically. We now have metaverses in games. It's just a whole new world, and it's all happened so quickly.

DAN HOWLEY: I guess when you look at the original Xbox, it was obviously coming out at a time when Sony was really kind of riding high after the original PlayStation. Nintendo still a force at that point. Obviously, both of those are still major players now. But Microsoft was coming up as a newcomer. What was it like having to go up against those huge, huge names in gaming and having to establish a new console and something that hasn't been done really since?

ROBBIE BACH: Well, it was scary, crazy, topsy-turvy. It's like any startup. The one advantage we had over most startups was we were super well funded, so we can make a few mistakes that cost us money. But you couldn't make mistakes that cost you market share, or reputation, or brand-building capability. And so we really had to focus on getting it right, and that led to just crazy amounts of work.

We had 18 months. We were working 18 hour days, and it disrupted our personal lives, created all kinds of challenges. But the team was really passionate, and it was some amazing individuals. And somehow, it came together with "Halo" at the launch, right? I mean, that's sort of the way the story plays out.

DAN HOWLEY: Yeah, I mean, obviously, that's something that myself and I think anybody else, our producer, Justin, coming off playing games, really, "Halo" was the jumping off point for a lot of people. I still remember playing the original "Halo" in my friend's bedroom when he got the Xbox, and hearing the original "Halo" music, and thinking, what is this? And then just going from there.

The original Xbox was a tough sell for a lot of people. Sony did really well with the PlayStation 2. Xbox underperformed the PlayStation 2. But then the 360 came out, and that outsold the PlayStation 3, which went with an insanely high price. Microsoft managed to undercut it, and kind of the rest is history. I guess was there ever a point though before the 360 launched that the idea of a follow up console was still up in the air?

ROBBIE BACH: Well, that's actually a really good question. Bill Gates, Steve Ballmer, they were deeply committed. Let's just say it that way. And so the idea of the old quote, failure is not an option. There was a bit of that mentality in the company around these types of things, especially a big initiative like Xbox.

But, certainly, in those early days, even before we launched, we weren't even sure we were going to get to the launch date, right? I mean, there was real uncertainty about whether the console was going to survive just to see the light of day. So in those early days, yeah, I think there was some uncertainty, and I think in most companies, the guy that loses-- the original Xbox lost somewhere between $5 and $7 billion depending on how you do the cost accounting. The guy who loses $5 or $7 billion doesn't survive, nor does the project.

But Microsoft-- because we had good market share, Microsoft, pretty early on, said, we want a next generation. And Bill and Steve challenged us to do it right, and the team really got organized on the strategy. And 360 was just an amazing product. It was an eight-year console lifecycle. That's unheard of. It was just the right product at the right time.

DAN HOWLEY: So, yeah, Zack. Obviously, the idea that the original Xbox not selling well-- wasn't for that push that they had gotten, we may not be there right now.

ZACK GUZMAN: Yeah, so wild to think about how much time it's been, but-- and how many "Halo" iterations have come out since then. Howley, I'm in the same boat as you. That's really what kicked it off for me, but Dan Howley bringing us the latest there on Xbox. Appreciate it.

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