During the development of the Xbox 360, Microsoft executives actually considered building Windows software into the new video game console and making the ­machine a fully functional PC. But they decided against it and instead designed the Xbox 360 as a complement to a Windows Media Center PC. The 360 was conceived not as a standalone box but as something that would fit within Microsoft's overall product line.

J Allard, the technology chief in charge of the Xbox 360's design, compares its development to sculpting. The team started with a lot of ideas and whittled them down to their essence. Microsoft bills the Xbox 360 as not just a game box but "the center of your digital entertainment world." Yet even as a hub, the Xbox 360 works as part of a larger system and has limitations, compared with a PC. Microsoft conducted research to see if console owners wanted to browse the Web, but because that feature ended up scoring particularly low, it wasn't included, says Scott Henson, head of the company's advanced technology group.

"Should we let people access random blogs?" Henson asks. "Our feeling is that's not what gamers want in a family-room experience."

By not loading the Xbox 360 with all the extra options that a computer has, Microsoft has kept the cost of the box down to $399 for the version with the hard drive and $299 for the Xbox 360 Core version without the hard disk. To turn the Xbox 360 into a full-on ­entertainment PC, though, owners need to plunk down more than the console's initial purchase price.—next: Extending Media Center >