The console also was built with direct support for broadband connectivity to the Internet via an integrated Ethernet port, and with the release of Xbox Live, a fee-based online gaming service, a year after the console's launch, Microsoft gained an early foothold in online gaming and made the Xbox a strong competitor in the sixth generation of consoles.

The Xbox was the first console to feature a built-in hard disk.

Whereas most games consoles to that point were built from custom hardware components, the Xbox was built around standard personal computer components, using variations of Microsoft Windows and DirectX as its operating system to support games and media playback, and featuring a 733 MHz Intel Pentium III CPU and a 233 MHz Nvidia GeForce 3-based NV2A GPU, the latter two making the Xbox technically more powerful compared to its rivals. With the release of the PlayStation 2, which featured the ability to playback CD-ROMs and DVDs in addition to playing games, Microsoft became concerned that game consoles would threaten the personal computer as an entertainment device for living rooms. It was also the first major console produced by an American company since the release of the Atari Jaguar in 1993. It is classified as a sixth-generation console, competing with Sony's PlayStation 2 and Nintendo's GameCube. It was released as Microsoft's first foray into the gaming console market on November 15, 2001, in North America, followed by Australia, Europe and Japan in 2002. The Xbox is a home video game console and the first installment in the Xbox series of video game consoles manufactured by Microsoft.

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