So, your challenge here is to have Microsoft enter the console market at a plausible date earlier than 2001.
Original X-Box was just a pretty standard Pentium III with a locked down bios and OS

So possible to do similar anytime after the Pentium era when you can get VGA resolutions down converted to S-Video, Component and Composite signals out, with copy protected CD-Rom, with Creative Labs SoundBlaster and ATI Video Rage 3D chipsets for ease of game development
Mid '90s.

But hardware wise, the X-Box hit when hardware wasn't obsoleting as it had in the past, so you could get some good sales before worrying about needing a refresh, four years before the 360, which was terrible, IMO, for Microsoft to continue on with.
 
But hardware wise, the X-Box hit when hardware wasn't obsoleting as it had in the past, so you could get some good sales before worrying about needing a refresh, four years before the 360, which was terrible, IMO, for Microsoft to continue on with
The opposite, Nvidia fucked up Microsoft with the GPU contract that left Nvidia full IP control of the GPU meaning MS lacked leverage for price drops and was cheaper making a new console from zero that having to bargain with Nvidia, that's why 360 was launched so fast, so they could have a console they own the components inside it. If wasn't by that, x360 would have been a 2006 device.

Plus Microsoft have zero reason, this is why Ms entered the video game industry https://en.m.wikipedia.org/wiki/Linux_for_PlayStation_2
 
that's why 360 was launched so fast, so they could have a console they own the components inside it. If wasn't by that, x360 would have been a 2006 device.
That’s the main reason? Interesting. I thought it was to get a headstart over PlayStation 3 after the first Xbox was completely curbstomped by Playstation 2.

Plus Microsoft have zero reason, this is why Ms entered the video game industry https://en.m.wikipedia.org/wiki/Linux_for_PlayStation_2
I knew Sony said that they wanted consoles including the PlayStation 2 to replace the living room over the PC, but didn’t know it got to this extent…

And this makes me even more baffled that Microsoft took so long to upgrade their old Windows Mobile to the iPhone/Android-like Windows Phone (and even dismissed and mocked them initially!) when their ‘computer in your hand’ designs probably made them an even greater threat to their Windows monopoly than video game consoles.
 
That’s the main reason? Interesting. I thought it was to get a headstart over PlayStation 3 after the first Xbox was completely curbstomped by Playstation 2.
That is what people thought at the time, but Dean Takahashi covered it in his books, Nvidia Contract with MS was a mess, as MS have no idea what to do with the OG Xbox, the meaning was very ad-hoc and in a way MS got lucky Intel and Nvidia give them amazing chipsets but they were left holding the bag of a design they never owned so price drops were impossible, that is why they switched to AMD and them IBM for GPU and them ATI for GPU(and both were thanks to Nintendo, seems the GC was so well done make everyone to look into IBM and ATI).

I knew Sony said that they wanted consoles including the PlayStation 2 to replace the living room over the PC, but didn’t know it got to this extent…
That is even more complex, in E3 1999 and 2001 sony was very blatant of their plans but seems Sony internal division derailed those and made the PS3 ail at the start.

And this makes me even more baffled that Microsoft took so long to upgrade their old Windows Mobile to the iPhone/Android-like Windows Phone (and even dismissed and mocked them initially!) when their ‘computer in your hand’ designs probably made them an even greater threat to their Windows monopoly than video game consoles.
MS lifeline is PC devices, either they underestimated the future Post PC devices(understandable but still baffling) or decided to enter late because that wasn't their lifeline(another big mistake) or maybe PC assemblers feared that Microsoft having such power in POST PC devices would make it even more powerful(reasonable but that is one of a hell of a foresight) that make MS just delay it? ummm
 
The other side of the equation is that there needs to be an opening for Microsoft to see and exploit - Sega's collapse with multiple failed systems in a row created that opportunity. You can't cripple the Genesis without risking butterflying the Playstation, and if you butterfly the Playstation then there is no example of a company moving into the console wars successfully to inspire Microsoft.
 
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