Stuffed animal:Project Natal Animals: E3 Project Natal Tiger

In the late 1990s, Microsoft made the decision to jump into the fiercely competitive--and potentially highly lucrative--video game console market. Their first system, the Xbox, debuted on November 15, 2001 amid a market dominated by Sony Computer Entertainment and the immensely successful Sony PlayStation 2. Microsoft's other main rival for market share, Nintendo, launched their next-generation system, the much-anticipated GameCube, in November as well. Microsoft envisioned their system as more than a home video game console; they developed the Xbox as a revolutionary home-entertainment vehicle. To this end, designers included an Ethernet port that allowed players access to Xbox LIVE (launched in November 2002), an online, real-time gaming community available for a monthly subscription fee. In addition, the console was capable of playing standard DVDs through a multimedia expansion pack. The system sold relatively well, topping 25 million consoles by the end of its production run in 2006, but failed to supplant Sony's PlayStation line as the dominate home console (both the PlayStation and PlayStation 2 sold more than 100 million units apiece). Several of the launch titles for the Xbox enjoyed overwhelming success-most notably Halo: Combat Evolved, which became the signature game for the system.

Microsoft's released the successor to the Xbox, the Xbox 360, in November 2005. The system is backward compatible to play original Xbox games in addition to Xbox 360 titles (more than 1,000 titles). Best selling games include: Halo 3, Gears of War, Call of Duty 4, and Marvel: Ultimate Alliance.

In 2010, Microsoft released a hands-free peripheral, the Kinect for the Xbox 360. This sensor detects motion and speech and allows the player to interact with the game without using a physical controller. Upon release, the Kinect broke a Guinness World Record to become the "fastest selling consumer electronics device" by selling eight million units within 60 days. The Kinect competes with other non-traditional game-play devices, such as Nintendo's Wiimote and the PlayStation Move.