# Ed Fries - Pinball Expo 2018 - Pinball News

**Source:** Pinball News (Pinball Expo 2018)  
**Type:** video  
**Published:** 2018-10-19  
**Duration:** 51m 30s  
**Beat:** Pinball

**URL:** https://www.youtube.com/watch?v=XydsQxLvGNs

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## Analysis

Ed Fries, former head of Microsoft Games, recounts his career path from early game development through the creation and launch of the original Xbox. He details Microsoft's internal politics, the pivotal "Valentine's Day Massacre" meeting where Bill Gates initially rejected the Xbox project before reversing course due to Sony competition concerns, and the strategic acquisition of Bungie to secure Halo as the console's killer app.

### Key Claims

- [HIGH] Ed Fries was hired by Microsoft in 1985 as a summer intern and offered a full-time position upon graduation in 1986. — _Direct first-person account of his early career timeline_
- [HIGH] Microsoft acquired Bungie by negotiating with Take-Two Interactive, who owned one-third of the company, trading Bungie's back catalog and the game Oni for Halo and all Bungie developers. — _Detailed account of acquisition negotiations with specific terms_
- [HIGH] The Xbox project approval meeting on February 14, 2000 lasted approximately 4 hours of criticism followed by a 5-minute approval after a vice president raised concerns about Sony competition. — _Detailed narrative of the meeting structure and timeline_
- [HIGH] The initial Xbox plan called for the console to run Windows, but this was abandoned during the 1999-2000 development year in favor of custom hardware. — _Explicit explanation of strategic pivot away from Windows-based approach_
- [HIGH] Halo received negative press coverage before Xbox launch, with critics claiming it looked like a PC game and that first-person shooters didn't work on consoles. — _First-hand account of press reception at E3 prior to launch_
- [HIGH] Microsoft's Xbox project was projected to lose at least $1.5 billion over its lifetime, described as 'probably optimistic.' — _Fries referencing the business slides presented to Bill Gates and Steve Ballmer_

### Notable Quotes

> "this is a fucking insult to everything I've done at this company"
> — **Bill Gates**, Valentine's Day Massacre meeting, February 14, 2000
> _Opening line of the critical Xbox approval meeting; demonstrates Gates' initial strong opposition to the project_

> "what about Sony?"
> — **Anonymous vice president**, Valentine's Day Massacre meeting
> _Single question that pivoted the meeting from rejection to approval; triggered Gates and Ballmer's reversal on the Xbox project_

> "we're going to give you guys everything you asked for. I know you wanted to be off on your own separate campus so the rest of the company wouldn't mess with you."
> — **Bill Gates**, Valentine's Day Massacre meeting conclusion
> _Gates' approval statement committing full resources to Xbox after Sony concern was raised_

> "I had less than two years to pull together an entire launch lineup for this new console that didn't exist, for hardware that doesn't exist and a lot of software that doesn't exist."
> — **Ed Fries**, Post-approval period discussion
> _Illustrates the immense timeline pressure and logistical challenge of Xbox launch_

> "pre-disastering means that...Robbie would be on the basketball court with them...and he would just let slip, oh, you know this thing we're going to show you two weeks from now?"
> — **Ed Fries**, Discussion of Robbie Bach's management techniques
> _Reveals Microsoft's internal political strategy of pre-positioning executives for bad news_

### Entities

| Name | Type | Context |
|------|------|---------|
| Ed Fries | person | Former head of Microsoft Games division; led Xbox project from conception through launch; currently maintains a blog about restoring Bronze Age arcade machines |
| Bill Gates | person | Microsoft CEO at time of Xbox project; initially rejected Xbox in Valentine's Day Massacre meeting; approved project after Sony competition concerns were raised |
| Steve Ballmer | person | Microsoft President at time of Xbox project; participated in Valentine's Day Massacre meeting; supported Xbox approval after Sony concerns |
| Robbie Bach | person | Ed Fries' boss at Microsoft; senior vice president; known for managing up in organization and 'pre-disastering' approach to executive communication |
| Jay Allard | person | In charge of Xbox system software; present at Valentine's Day Massacre meeting |
| Alex Seropian | person | Co-founder/runner of Bungie; contacted Ed Fries to discuss acquisition; partner with Jason Jones |
| Jason Jones | person | Co-founder of Bungie; partner with Alex Seropian |
| Lorne Lanning | person | Major game developer; created Munch's Odyssey, a key Xbox launch title; reportedly recruited away from Sony |
| Bruce Artwick | person | Founder of Bruce Artwick Organization; creator of Microsoft Flight Simulator; based in Chicago |
| Jordan Weisman | person | Founder of FASA; creator of Battletech, MechWarrior, Crimson Skies, Shadowrun; acquired by Microsoft and moved to Redmond |
| Microsoft | company | Tech company that created Xbox console; headquartered in Redmond, Washington; entered game console market with Xbox launch in November 2001 |
| Bungie | company | Chicago-area game developer; created Halo and Oni; acquired by Microsoft for Xbox launch; partly owned by Take-Two Interactive prior to acquisition |
| Take-Two Interactive | company | Owned one-third of Bungie; negotiated Bungie acquisition deal with Microsoft; received Bungie's back catalog in exchange |
| Sony | company | Competitor to Microsoft; concern about Sony's home entertainment strategy influenced Xbox approval; had relationship with Lorne Lanning before his move to Xbox |
| Raw Mox | company | Small California game company; hired Ed Fries as high school programmer around 1982; published his games including Princess and Frog |
| Ensemble Studios | company | Texas-based game developer; created Age of Empires for Microsoft; major financial success that funded further acquisitions |
| High Voltage | company | Chicago game company; worked with Microsoft on Xbox titles |
| Halo | game | Bungie game; critical Xbox launch title; initially received negative press at E3 before launch; became massive commercial success |
| Munch's Odyssey | game | Lorne Lanning game for Xbox; major Xbox launch title; competing with Halo as potential system-seller |
| Oni | game | Bungie game in development; Microsoft negotiated to finish and publish it as part of Bungie acquisition deal |
| Xbox | product | Microsoft's game console; launched November 2001; first American game console in 20 years at that time; project approved February 14, 2000 |

### Topics

- **Primary:** Xbox console creation and development, Microsoft internal politics and decision-making, Bungie acquisition and Halo's role in Xbox launch
- **Secondary:** Career progression in game industry, Console vs PC gaming market dynamics, Gaming industry consolidation and acquisitions
- **Mentioned:** Ed Fries' arcade machine restoration hobby

### Sentiment

**Mixed** (0.55) — Fries speaks with pride and humor about Xbox's success and his role, but the Valentine's Day Massacre meeting narrative conveys significant stress and conflict. His reflection on the meeting uses comedic timing, suggesting comfortable retrospection on a difficult experience. Overall tone is nostalgic and proud of achievements, though candid about industry politics and challenges.

### Signals

- **[business_signal]** Press initially skeptical of Halo as Xbox's killer app; critics claimed first-person shooters didn't work on consoles and game looked like PC port (confidence: high) — Fries recounts E3 preview negative reception; press stated 'this shows you don't get the console world'; Halo ultimately proven successful at launch
- **[business_signal]** Xbox project approval granted despite initial rejection; shifted from Windows-based design to custom hardware approach; required $1.5+ billion investment over lifetime (confidence: high) — Detailed account of Valentine's Day Massacre meeting (Feb 14, 2000) where Gates reversed position after Sony competition concerns raised
- **[competitive_signal]** Xbox explicitly positioned to compete with PlayStation 2 and Nintendo 64 console market; Microsoft leveraging PC game developer relationships as competitive advantage (confidence: high) — Fries discusses Xbox as entry into console business after PC market growth slowed; notes advantage of having PC developers rather than console-only teams
- **[personnel_signal]** Bungie acquisition brought game developers and Halo IP to Microsoft; described as 'key to success' of Xbox launch (confidence: high) — Fries negotiated with Take-Two to acquire Bungie; traded back catalog and Oni for Halo and developer talent
- **[personnel_signal]** Ed Fries moved from Excel/Word management (managing 60+ people) to head of Microsoft Games division, against strong advice from company leadership (confidence: high) — Multiple vice presidents told Fries he was committing 'career suicide' by leaving Office to run games group
- **[announcement]** Xbox console announced by Bill Gates at Game Developers Conference (scheduled for March 2000, one month after approval meeting) (confidence: medium) — Fries mentions meeting approval was conditional on Gates' GDC announcement happening the following month
- **[business_signal]** Microsoft's strategic pivot from Windows-based console to custom hardware was driven by competitive threat from Sony's home entertainment ambitions (confidence: high) — Single question about Sony ('What about Sony?') from anonymous VP triggered Gates and Ballmer's reversal from rejection to full project approval
- **[technology_signal]** Early Xbox hardware constraints; E3 demo ran at half speed, forcing difficult graphical compromises for Halo 4-player split-screen demo (confidence: high) — Direct account of hardware limitations impacting press perception of Halo at E3 before launch

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## Transcript

 Okay. And now I'm going to tell you that I'm actually not going to talk about that because about a week ago I sent a mail and said, actually, I'm going to talk about the creation of Xbox and could you change like the title of my talk and maybe it was too late to change it or something. So, but in the Q&A section which I'm going to keep an eye on, I'll make sure I have time. I do spend a fair amount of time fixing Bronze Age arcade machines. I do want to give that talk at some point. It's a pretty, I think this talk will be more broad audience. But more people care about it. But if you want to chat old arcade games, I did just fix a gun fight the other day. So I actually fixed it twice now. But anyway, it keeps breaking. Okay. Thank you. It's nice to be here. I'm a little frazzled. My plane landed at 4.30, so, and it's 6. And then I was like, I'll call up an Uber, and the Uber's half an hour just to get to pick me up at the gate. So I wasn't sure I was going to make it here, but I made it. It's good. I'm here, so here we go. So let me tell you just about me and how I got into this stuff, how I ended up at Microsoft, and then I'm mostly going to talk about the creation of the Xbox and some crazy stuff that happened along the way. So I grew up in Seattle, grew up in Bellevue. I had two parents who were both engineers. My dad was an electrical engineer, my mom was a chemical engineer, and then when I was getting out of basically elementary school, my mom went back to college and got a master's in computer science. So I grew up in a pretty technical house. You know, in the early 70s, they were always bringing home stuff for us to play with. Pocket calculators, that was probably the first thing I learned to program. Building electronic stuff with my dad. My older brother went off and became an electrical engineer and I followed in my mom's footsteps and became a programmer. Basically, my programming started when I was in high school. I got an Atari 800 for Christmas one year. I was hoping for an Apple II because that's what we had at school, but I got an Atari and it turned out to be an awesome machine to work on. And I just basically started to teach myself to program, first in basic and then when that wasn't fast enough to do the kinds of games that I was seeing in the arcade, I started working in assembly language. And I guess my big break came as a high school kid I was working at Shakey's Pizza, you know, playing video games on the side. And I had written a Frogger clone called Froggy. And this little company down in California called Raw Mox saw my Frogger clone and they tracked it back to me, which is pretty amazing. They found the right Eddie Freeze in the country who was a high school kid working at a Shakey's pizza and said, do you want to write games for us? Absolutely, yes I do. And so that was 19, right about 1982. So I started to work for them on the side while I finished high school and then went off to college. I made three games for them on the 800. They're all collectible because we didn't sell that many copies, but look for Rom-Ocs. If you want the ones from me, you want, Froggy had to be renamed. They were afraid we'd be sued. So they made me change the cars into jousting knights and give it a medieval theme. So it became Princess and Frog. So Princess and Frog. Then I did a game called Ant Eater, which is not the arcade Ant Eater. And then I did a game called Sea Chase. By then it was 1984, and the entire game industry, as you know, melted down in 84. And I was out of a job. I was halfway through college, and I was writing games to help pay for my college. So I had to get a real job. I started working in the computer center at school. I started to look for summer jobs back in my hometown of Bellevue, Washington. And Bellevue, Washington happens to be adjacent to Redmond, Washington. People probably know Redmond is the home of Microsoft. So one spring I sent a resume to Microsoft. And they liked what they saw, and they flew me back up home for an interview during spring break and hired me. And so I worked as an intern for that summer, the summer of 85. And they liked the job I did that summer, and so they hired me full-time. They offered me a full-time job when I graduated from college in 86. So anyway, fast forward. So I basically, yeah, things went pretty fast over the next 10 years for me. They hired me in to work on Excel. So I was the youngest of seven programmers who were working on the first version of Excel for Windows. We were trying to battle Lotus. Lotus 1, 2, 3 was the biggest PC product in the world. Lotus was bigger than all of Microsoft, so we felt like we had a pretty important job, just seven of us trying to beat this company that was bigger than all of Microsoft. And so we worked on that game, that non-game. It's hard, I know. I've done so many games since we worked on that program, shipped it, and the group grew from seven to 15, and we did more Excel, and then it grew to 35. And by then, all of us, original seven, were managing small teams, and then it became a group of 50 programmers. And I was the lead programmer by then. This is after about five years. And anyway, so I'm working on Excel. My boss, gets called over to run Word. Okay, so now we're talking about early 90s. So the head of Word leaves. My boss gets promoted to run Word. He goes over and immediately has a big fight with the development manager on Word. And the development manager gets mad and quits. And so my boss is like, hey, Ed, why don't you come over and work on Word? And that would be a step up for me now. And I like this guy, so I'm like, sure, I'll come over and work on Word. Programming is programming, right? It's all fun. So I go over to Word and now I'm managing 60 people, okay? Been at the company a little over five years. And I'm also programming on the side because I love to program. But now I have a job where I have to manage 60 people and also write code because writing code is fun. So I do that for the next five years. Put out a bunch of words. We battle WordPerfect. which was the leading word processor at the time. And everything's good. And so it comes the point where I've been at the company almost ten years and they're like, well, the next thing for you to do, the next step in your career is to run a business at Microsoft. You know, maybe you should go run like the PowerPoint business. That would make sense. And I'm like, yeah, but if I ran a business, I couldn't program anymore. And they're like, yeah, that's true. You wouldn't be able to program anymore. I'm like, but I love to program. I mean, there's really only two things I love. I love, you know, I love programming and I love video games. So, you know, like when I wasn't at work, I was home playing all the greatest games. And, you know, early 90s was a great time to be a PC gamer. So they didn't care about that. They're like, you should go to California and run PowerPoint. But I cared. So I looked around the company and there was a small games group at that time in the company doing flight simulator and not too much else. And I said, why don't I run that group? And they told me that was crazy. Why they multiple vice presidents called me into their offices. They said I was committing career suicide if I left office to go run this games group, another vice president said to me, why would you leave office, one of the most important parts of this company, to go work on something no one cares about? So I'm like, I care about it. I think games are great. I think they're really important. So I put my foot down. I said, no, this is what I really want to do. And they kind of rolled their eyes and they were like, okay, fine, go waste your career. Go work on your game thing and they let me go take over this little group. And so that was, we're talking mid-90s now. And it was great. It was really great. I was worried whether I was making the right career choice until a week into the new job they're like, oh, we have a trip plan to Japan. You want to come to Japan? I'm like, yeah, I'd love to go to Japan. So we go to Japan, we meet all these amazing game developers. It was incredible. It was just incredible. I'm like, I love my new job. My new job is great. And really, it turned out to be good in another way, too. And that is, you know, when they said to me, why would you leave office to go work on something no one cares about, I didn't really realize they they meant it so literally. I mean, they really didn't care what I was doing. You know? Like, as long as I wasn't losing money for the company, I could do whatever I wanted. You know? So, I mean, my, what would you do, right? You work for this big company. They don't really care about what you're doing. But you've got a group of 50 really hardcore game people, you know, and you can pretty much do whatever you want. What would you do? I mean, I bet you would do what I did. I bet you would like just go all over the world, try to sign up all the great game developers, everybody's game who you've ever played, who you thought was great, who you had respect for. You'd meet them, you'd talk to them, see what they want to work on, and then you'd try to get them on your team to make games for you, you know. And so that's what we did. We ran all over the world, met with every great game designer you can think of. And we started to put more and more game deals together. And actually Chicago, since I'm here in Chicago, I should talk about Chicago for a minute. Chicago was a really important source for us of great game development, great game developers. Of course, at the beginning, our core product was Microsoft Flight Simulator, which was made by Bruce Artwick Organization, right here out of Chicago. My predecessor had just acquired that company. So when I came in, the first job I had was to move all the people from Chicago who made Flight Simulator out to Seattle and get them all settled and working on the next version. So that was the first time I raided Chicago. A few years later, we're doing pretty good. We had shipped Age of Empires, which was made by a great group, Ensemble Studios, down in Texas. And that was a big hit for us. And so between the money coming in from Flight Simulator and the money coming in from Age of empires, we could reinvest and do more acquisitions and try to grow the business even more. And so I came out here again and bought FASA, Vecennia Jordan Weisman's company, and moved Vecennia Jordan and his team out to Redmond. And Vecennia Jordan has been a friend ever since, an amazing game designer, creator of Battletech, MechWarrior, Crimson Skies, Shadowrun, many franchises that people know. So anyway, that was the second time I raided Chicago. So things are going pretty good. The group is up to maybe 400 or 500 people. You know, we're growing. We're making money. We're making better products, better games. And then one day, I'm sitting there in my office and these crazy guys come in from the DirectX team, okay, and they said, we want to make this DirectX box. And so if you don't know, DirectX is the Windows, it's the name of the API it the name of the interface between programs and Windows for things that have to do with gaming okay It the gaming part of Windows say it that way So anyway I like what is this DirectX box What are you talking about? And they're like, well, it's going to look like a game console, but it's really just going to be a PC. A PC running Windows, and you're going to stick a game in, and it's going to act just like a game console. It won't show the Windows logo or anything. it'll just boot the game. But really, behind the scenes, it's going to be copying the stuff off the game disk onto the hard disk. And so it's going to act to the customer like it's a PlayStation or, you know, N64 or something. So I was, you know, naive and I also thought, I thought about the console market. I thought, well, you know, we had grown a lot in the PC market. It was getting tougher to grow our market share. It would be nice to get into the console business because that's a big business. And here were these guys saying we could have a Microsoft branded console that was basically a PC in disguise. That would be great for me because I have all these PC developers. I don't have any console developers. So if I wanted to like make console games, I'd have to work with completely different developers, I'd have to, you know, make different kinds of games. But this thing sounds like out of the box. It could just run basically games we have today. Which turned out, all of this turned out to be false. But anyway, pretty much. So I'm like, all right, I'm on board. Let's do it. And that's where we start to get into Microsoft politics. And, you know, Microsoft, one way to think of Microsoft is like this giant turf war fought between these big groups. You know, everybody has got their area staked out, you know. So like I had games staked out. If someone else in the company was trying to make a game, sooner or later they'd have to go through me. So, you know, I would like end up getting that in my territory. You know, so in this case, who else had game console territory? You know, these DirectX guys wanted to do it. Well, it turned out there was another group in the company that had already tried to stake out this territory. And that has to do with Sega. Does anyone know about, can anyone guess this? No. No. No. Dreamcast. Windows CE on the Sega Dreamcast, that's right. Microsoft had acquired this company and along with it had come some guys who had worked at 3DO. And the 3DO guys had convinced the Windows guys, the Windows CE, the embedded version of Windows guys that they should get into the console business. And then they went to Japan and they twisted Sega's arm really hard until I think probably by piling a lot of money on the arm until it bent so far that Sega put a little Windows logo on every Dreamcast because there was a way to boot a Dreamcast into this Windows mode that no one ever used. And so that team was like, all right, we achieved a great job with Dreamcast, now we're on to our next thing. So they wanted to build a console, we wanted to build a console. So then when two groups at Microsoft both want to do the same thing, then you have to have a battle, right? And so that was the next step for Xbox was we had to have the battle. And the way a battle works at Microsoft is each group gets as many vice presidents as they can on their side. So we went out and we gathered a bunch of vice presidents and they went out and they gathered a bunch of vice presidents. And then we go in front of Bill and Steve Ballmer and we're like, you know, here's our plans. So they presented their plan. Their plan was basically they were going to build something very similar to a PlayStation 2. It was going to be completely custom, custom hardware, custom software, built for games. And then it was our turn and we're like, ha, ha, that's so silly. You know, we're, it's not just silly what they're proposing, it's really off strategy, which is about the worst thing you can say to somebody at Microsoft, that their plan is off strategy. You know, that means it's like not, not following the religion of the company or something. It's off strategy. So they were off strategy because are they running Windows? Are they, is it part of the PC ecosystem? No, it's like totally custom, this thing. You know, we're on strategy, you know. We're making a PC in a box that runs Windows. Heck, Dell could build this for us maybe. You know? Adele, other people could build this. So Bill and Steve, you know, they listen to both sides and then they have to pick and they bless our project. They bless the Xbox and the other project blown away. Their jobs are gone. They got to find new jobs in the company. Some of them come knocking to work for us. We let them in. We let them in. But now, now we have to actually figure out what we're going to do because all we really have at this point is like a PowerPoint presentation. So we spend the next year trying to figure out what we're actually going to make. And so this is the year between 1999 and 2000. And the more we look at it, the more what these 3DO guys were saying is making sense to us. And the less our own plan is making sense to us. I mean, could we really have this thing running Windows? I mean, Windows isn't great for games. It gets in the way. It takes up a lot of memory. It's, you know, it's a problem, you know. And could it really be just like exactly like a PC? Or wouldn't it be better if we really had some custom hardware that was unique, you know, that would make it perform better? So we kind of, our plan kind of slid more and more towards their plan. We didn't go all the way to where their plan was. But it was, we slid closer to their plan. Maybe it ended up somewhere in the middle. And the biggest part of that slide was when we dropped that it would run Windows, okay? So the thing you got to know, I worked for a guy named Robbie Bach. And one of Robbie's real great abilities was managing up within the organization. This was probably how he got to be a senior vice president of the company. He was really good at managing his bosses. And one of his great skills was something that we called pre-disastering, okay? And pre-disastering, in Robbie's speak, pre-disastering means that Let's say we're going to have a big meeting with Bill or Steve. Before that meeting, Robbie would be on the basketball court with them. This would be with Balmer, not with Bill. Playing basketball. And he would just let slip, oh, you know this thing we're going to show you two weeks from now? Yeah, it's not, you know, we had to change this thing or we had, you know, we're going to lose money on this project, but it's okay. We're going to make it up later, blah, blah, blah. And so by the time we would walk into a meeting normally, they would already know what we were going to say. They'd already know all the bad news. They had been pre-disastered. And so sometimes we'd be in these product reviews, and one team after another would get up, and they'd get up, and Bill and Steve would just, bam, pound these guys, and bam, pound these guys. And then we would get up, and we would give just as bad news as the other guys. And they would just kind of nod and shrug, and then we would move on. And the other people were like, why did that happen? It happened because they'd been pre-disastered. That's the important thing. But we had this big important meeting coming up. And this was the meeting where Xbox was either going to be approved and it was going to go forward or it was going to be killed, okay? And that meeting took place February, February 14th, 2000, okay? So either on this Valentine's Day. Either we were going to get approval and then the next month we had it set up so that Bill was going to get on stage and announce the Xbox to the world at the Game Developers Conference or the project was going to be canceled. Well, for whatever reason, Robbie failed in his pre-disastering going into this meeting. And this is a meeting that we call the Valentine's Day Massacre. And so this is kind of a famous meeting in the lore of Xbox. And so we walked into the board room for Microsoft. This is about as serious as a meeting could be at Microsoft. You know, and you're going to have the CEO, you're going to have the President, and then many, many Vice Presidents there to hear this presentation. Okay. So we go into this meeting. Bill's a few minutes late. He walks in and he's got the deck for the meeting, the PowerPoint slides in his hand. And he slams them down on the table and he says, this is a fucking insult to everything I've done at this company. Okay, that's the opening line of the meeting. So, clearly pre-disastering did not happen. This is the first thing that we realized. And the second thing we realized is we know why he's mad. He's mad because a year before he had picked our team over this other team because they were off strategy and now we're off strategy because we're not running Windows. Well, whose fault is that? It's not the hardware guy who's sitting next to me. It's not me, I just make the games. Now, Jay Allard, he's in charge of system software. So, Jay, we all turn to Jay, but Jay is not saying anything. He's still in shock from the Bill Gates shock wave that spread out across the room. So Jay's not going to say anything, fine, I'll say something. So I try to defend it. Bill yells at me, shoots me down. Robbie tries to defend it. Robbie gets yelled at. He gets shot down. Now Jay's got his voice again. Jay stands up, you know, tries to defend it. Jay's getting shot down. And by then, you know, Balmer's also getting his turn. See, the way it would work is Bill would be all about all the technical stuff and Balmer would be all about the business stuff. And Balmer is like flipping through the deck and looking at the business slides. And the business slides, frankly, were pretty terrible. I mean, we were going to lose at least a billion and a half dollars, probably more, over the life of this project. And that was probably optimistic. So as soon as Bill runs out of steam. Then, Bomber's on there. Bam! You know, why are you losing all this money? You know, blah, blah, blah, blah, blah, blah, blah, blah, you know. So, they're taking turns, you know, and they're yelling at us and they're yelling at us and they're yelling at us. And, you know, Robbie and I had been at the company for 15 years at that point and we were used to getting yelled at by these guys, but still, by their standards, this This was like a lot of yelling coming our way, you know. And we're just basically saying the same thing. We're like, we looked at this for a year. We're really confident that this, if you want to do this, this is the best way to do it. We don't know if the company should do this or not. We're not saying you should blow a billion and a half dollars or not. We're just saying, if you're going to do this, this is what it's going to cost and the best way for us to do it So basically we just kept saying that same thing over and over again And they kept yelling at us over and over again So it 5 o It 6 o It 7 o It Valentine Day Did I mention it Valentine Day I mean, all of us have, like, you know, girlfriends or wives or whatever back home. We have reservations, you know. So now we're going to be in trouble not only at work, but also at home, right? This is getting really serious. And they're just yelling at us, you know. And then there was just like, you know, it's coming up on 8 o'clock. By now we just know we're screwed at home, you know. It's like we're going to miss whatever reservations we have. A guy, kind of a random vice president who hasn't said anything this whole meeting, waits for a certain lull, and then he says this. He says, what about Sony? And we knew what he meant. Everyone in the room knew what he meant, because when he said that, this guy had been sending these almost conspiracy theory-type memos for the last couple of years, and his theory basically said that Sony was quietly building a thing that would be a competitor to Microsoft in the home. Remember, Microsoft's core motto is, you know, a computer on every desk and in every home running Microsoft software. Okay. And so when he says, you know, Sony's putting like a hard disk over here, you know, in like a TiVo type device. And they're putting a keyboard over here. And they're putting computing power over here. It's all part of the grand plan from Sony to integrate these things and to basically take over the home and kick Microsoft completely out of the home. That's the way his theory went. Okay. So anyway, but he doesn't have to say all that because he's been writing these memos for months. So he says, what about Sony? And Bill kind pauses and he says, what about Sony? And then Balmer looks at Bill and says, what about Sony? And then they're looking at each other. What about Sony? And then Bill says, we're going to do this. We got to do this. And then Balmer says, yeah, we should do this. And And then Bill's like, we're going to give you guys everything you asked for. I know you wanted to be off on your own separate campus so the rest of the company wouldn't mess with you. I know you've got all this money, you want all these resources, you want to hire all these people. We're going to do it. And Ballmer's like, yeah, we're going to do it. We want you guys to go out and do this thing. That part of the meeting took five minutes. This is after being yelled at for almost four hours. That part, five minutes. And the meeting was over. And we walked out of the meeting. We were still screwed. It was still Valentine's Day. But our project had been approved. And I turned to my boss, Robbie, and I just said, that was the weirdest meeting I have been in in my whole time, 15 years at Microsoft. But that was how the project started. All right. I'm going to take a drink. I'm going to finish up in pretty quickly, maybe 10 more minutes, and then I can take questions about Xbox. I can also talk about Halo 2600, if there's anybody who knows what that is. I can talk about fixing old arcade machines, which I do, which you can read about on my blog, edfreeze.wordpress.com, mostly Bronze Age stuff. But anyway, so the project was approved and now kind of the next day it started to sink in what that meant because it was February of 2000 and I knew that we were shipping in November 2001. So that meant I had less than two years to pull together an entire launch lineup for this new console that didn't exist, for hardware that doesn't exist and a lot of software that doesn't exist. And that's basically, that was a crazy two years from then on out. And that's the third time that I raided Chicago was about a month later, my phone rang and it was a guy named Alex Seropian. And Alex runs, or at that time ran a little game company here in this area called Bungie with his partner Jason Hilton Jones. And they told me that they were going out of business. They were a small developer publisher and life had been getting harder and harder for developers to also be publishers. Walmart didn't want to talk to 37 little developers. They wanted just to talk to a few big guys. Take Two, they had already sold a third of the company to Take Two. But I knew them. I had played their game, Oni, and I knew it was very good. I'm sorry, not ONI, the one before that, real time strategy. I'm forgetting it now. Anyway, so are you interested, he says. I'm like, yes, I'm very interested. He says we have this thing called Halo that we're working on. I'm like, yeah, I've seen the trailer. I'm interested. He's like, well, Take-Two owns a third of us. I'm like, okay, I'll talk to Take-Two. So I get on the phone with the head of Take-Two and we negotiate and we come up with a deal. And the deal is Take-Two can have all of Bungie's back catalog, all the games that they've ever made. They can have the intellectual property for all that. We will finish the game Oni, which I misspoke about earlier. We'll finish the game Oni, which is in development in a part of Bungie that was in California, and we'll give it to them finished and then they can ship it. And all I want is this crazy new thing called Halo and all the developers. That was the deal. And they agreed to it and that's what I got. And of course, that turned out to be the key to the success of the launch of Xbox was that one game. We did a bunch of other games. You know, another Chicago company we worked with was High Voltage, who's still here. Another one, Day One, maybe some people know. They did a game called Mecha Assault with us. So a lot of stuff came out of Chicago. I'm sorry I moved so many people out of Chicago to Seattle. But anyway, so yeah, so we did that. Lorne Lanning, one of the biggest early deals we did was with Lorne Lanning to make a game called Munch's Odyssey. That was another big launch title for us. And coming into launch, we didn't really know. We didn't really know what, well, we didn't know if the console was going to be successful at all. But we really didn't know what game was going to make it be successful. We loved Halo. All of us loved this game. I mean, it looked great. It played great. But the press didn't love it. The press had a lot of negative things to say about it, and for a few reasons. We had showed it at E3 in the summer just before launch. And at that time, we still didn't have full speed hardware for our Xboxes. So the Xboxes were running at half speed. The graphics part was running at half speed. And the Bungie team made the decision to show four player split screen multiplayer, which was a cool thing to do on any console. But it's like the most demanding graphical thing. And then you're running on a machine that's half speed. So the press didn't like it. But they were also saying that this game kind of just proves that you guys don't get it. You don't get the console world. This looks like a PC game. It's like you took this PC developer and you made a PC game. Nobody does first person shooters on consoles. I mean, OK, there was GoldenEye, but that's with that wacky Nintendo stick. So this just shows you guys don't get it. And we'd be like, well, but we have Munch's Odyssey, you know, that's, Lorne Lanning, that's, he's, we stole him away from Sony. They'd be like, all right, fine. So, anyway, going into launch, would it be Halo? Would it be Munch's Odyssey that would be the big hit? Would it be something else? We didn't know. But the good thing is we had a huge pile of cash to spend on marketing. So we spent the money. We marketed everything and we launched and Halo was super successful. And the Xbox was really successful. And that's basically the story of how we made the first American game console in 20 years at that point. And it's still around today, so that's good. So I'm just going to wrap it up there and then take questions. I have no idea what the units are. I would look at the Wikipedia article and see what it says. We did well in North America. We outsold Nintendo in North America, which was a huge thing for us. We did less well in Europe. And we did terrible in Japan, really, really bad in Japan and I can talk specifically about that if people want to hear it. Yeah, Jason. Oh, okay. Halo 2600 question. He asked if I'm bank switching. So I really don't want a bank switch which means on the Atari 2600, the maximum address space that machine can deal with is 4K without bank switching. So I wanted the game to fit in 4K and it does. The binary is 4K. And that made it hard. But that hard part is also what's fun about it for me. I mean, I think, I don't get, I mean, I'm not trying to rag on someone else's entertainment, but I mean, there's people who make games for the Atari 2600 now that are basically like computers in the cartridge, you know, and it's basically just driving the output through the video. I mean, and they look beautiful. And they're huge. They're 32K, 64K even. But it's like, I don't know, just make an Atari 800 home brew then. I mean, I think the challenge of working on an old machine is to try to live within the constraints of the system. And yes, people did bank switching back in the day. And they even shipped custom hardware like Pitfall 2 had a custom music processor and extra RAM. But I don't care. I mean, to me the fun is just living within those constraints. You've got only 128 bytes of RAM. You've got only 4K of code address space. And you're running on a very slow processor. You have no frame buffer. It's a really, really difficult machine to work on. And that's what's fun about it. So, anyway, yeah, it had to be 4K. I also did a Rally, a RallyX clone that's also 4K, so, yeah. All right, what else? Yes, sir. You mentioned Apple's less than two years from approval of the launch. Yeah. How many different things did you do in parallel in that time? That's a great question. We would normally have about 50 to 60 projects in parallel at any one time. So a lot of projects. And we would start a ton of things and many we would kill. We had three games. We built this whole special relationship with Steven Spielberg and he was part of our launch saying nice things about the console because he had this big movie coming out and we built three games, three different genres of games around this movie. And then I went to the Hollywood premiere of the movie, which was kind of exciting, and all the actors were there. And the movie opened Does anyone know the movie It a movie called AI And then we went back and we canceled all the games But that the game business That entertainment business you know Not everything works out You have to try a lot of things in parallel, absolutely. Yes, sir? Yeah, there was a long tradition of building Easter eggs into our products. And it was, there was a really weird rule internally about it. The rule was that the code for the Easter egg could be obvious, but the way that the Easter egg actually happened could not be obvious. So there would never, you would never just see a call to the Easter egg. There is always some weird way where you were building some number in memory and it was actually a pointer and you're going to jump through that pointer to jump to the code, something like that. So that's one thing. By the way, just to plug my blog a little bit, I do have an article there about what I think so far is the earliest Easter egg in an arcade machine and it's in Starship One and it's a fun story to read. So if you haven't read that, read about how I found out that this Easter egg existed and then tracked down and reproduced it. But anyway, a lot of the really out of control ones happened after I left. So the flight simulator happened after I left, the Doom one happened after I left. The version that I was technical lead on the Easter egg. This one I've never seen written up, but, you know, if you got the right version of Excel, which would have been Excel 3, and you did the right sequence of commands, which I have no idea what it is, what would happen is something that I had a dream one night. And in the dream, there was this copy of Lotus 1, 2, 3. We were very focused on this being the enemy. To give you a sense, I had applied to Lotus, like, when When I graduated from college, I applied to a lot of people and I got a rejection letter. Well that went right up over my desk, you know, so every day I could look up and see the rejection letter and then work hard to destroy this company. But anyway. So in my dream, there's a copy of Lotus 1-2-3 and it's sitting there and then it starts to shake and then it bursts open and just bugs crawl out of it and crawl all around the box. And so that's what we tried to capture in the Easter egg. So, it's a great question. All right, you had one. Thank you. . . Right. How do we make sure that the Xbox wasn't already outdated as far as graphics power goes? I mean, every console that ships is sort of by definition outdated in a sense because, you know, video will come out with a $2,000 graphics part and you're not going to have that. I think in a lot of ways we got really lucky with the first Xbox. I think the hardware that we shot for, it just barely, barely came in on time. I mean, we got the final parts maybe somewhere a month to two months before and then that had to go to manufacturing and come back for launch. So I think we shot about right. If we had tried to get anything more power-wise, we wouldn't have had it. It would have delayed our launch. Our launch was delayed by one week. We were, we wanted to ship on November 8th and we shipped on November 15th. And the reason we did was because of actually 9-11. So right when we were in the middle of kind of the final stretch for making the Xbox 9-11 And it affected us in a bunch of different ways. First of all, we were all spread around the country, all the senior management promoting the product and, you know, meeting with developers, meeting with the press. I was in San Francisco that morning. My boss, Robbie Bach, was in New York. And then we were trapped wherever we were, right? I just watched this. There's a great musical called Come From Away about all the people who got trapped in Newfoundland. Really great. But anyway, we were trapped in our different places. I managed to get a flight out of San Francisco about four days later. But Robbie had to rent a car and drive from New York to Seattle, which was kind of an epic trip. But we were the makers of Flight Simulator. And, you know, Flight Simulator had been used by the pilots to train, which was awkward. We had our big racing game, Project Gotham Racing, which was racing through the streets of New York. And so we had meetings where we were like, well, what do we do? Do we take out the Twin Towers now or do we leave them in? We ended up taking them out. And then it's just all the ripple of it, all the way up to launch. Our launch was in New York and we were already locked into that. There was a new Toys R Us that was opening on Times Square and we had bought out all the electronic signs all around Times Square so they'd have Xbox everywhere. And then we were going to have this huge line of people waiting at midnight to get Xboxes. And the police kept showing up and breaking up the line because they didn't want large groups of people standing together. I mean, you've got to remember what it was like back then. This was like two months after the event. But we were able to go through with the launch event, And it was okay, it was okay. So. Jason. I was reading about some of the bigger processors . Did you ever consider that? . Yeah, so people had put bigger processors in it. I am much less a hardware guy than a software guy. Jason knows this better than anybody. My understanding is that the architecture of the original Xbox is very much very PC-like. They tweaked some things to create sort of copy protection, but that copy protection was really mostly there just to try to make the other publishers feel good about their stuff wouldn't immediately be duplicated. We had, there was kind of a scary group of Middle Eastern programmers, not Middle Eastern, Middle European, like from Romania or something. I don't know, you didn't ask too many questions about these guys. But they're like, yeah, Give us your Xbox and we'll try to break it." They did it in three days, you know. So we knew that the protection wasn't going to last very long. You know, after we shipped this guy, Bunny Huang or something like that, wrote a whole book about cracking the Xbox and everything. It's great. I'm happy he got famous for that. But these Romanian guys did it in three days. So anyway, it was very Xbox-like or very PC-like architecture. So I think to really answer your question, I think you could do something like that. Sure, why not? As long as it was fit with the North Bridge or South Bridge or whatever those terms mean, which I don't really understand. Okay. Oh, he's first, then you. Go ahead. So first of all, thank you for making that special trip and coming. I seriously just got off the plane and came straight here, yeah. I was going to say that I didn't know, but when you asked, the name came into my mind. I mean, I was going to say I had forgotten his name, but I actually just remembered it. His name is Craig Mundy. Did I thank him? No way. I probably should have. I mean, to To be fair, we had actually tried earlier on in the project to partner with both Nintendo and Sony. So we, I was at the meeting when we met with the senior guys from Nintendo and talked about could we work on a game console together. That was part of that one year of research that we were doing. And Bill Gates had a private meeting with Kutaragi and had made a similar kind of appeal. Hey, maybe we could do the software, you guys could do the hardware, and we could work together. And that appeal was rejected. So we didn't feel too guilty about it, maybe. But yeah. Craig Mundy. Yeah. About that time, around 2000, it's the first time I'd heard of the concept of bricking. and the main concepts in general doing that. I don't really know which one was the first one, but what did, you know, when you all heard about that for the first time, what were the feelings and then going into design afterwards, what kind of things did you have to consider in relation to printing? So I'm not going to answer that question. I'm going to answer a slightly different one. I'm going to take your question as like what was the thing about the hardware that we were most worried about and that we, that maybe upset us the most? And it actually turned out that there was a problem with the original Xbox power, the way that the power was handled into the Xbox. And some Xboxes burst into flames. I think one might have burned a trailer down somewhere, trailer home down. So that was actually something that didn't get a lot of press, but that was actually something we were very worried about. It came about a year after the ship. And we actually went out and I was surprised we didn't get more flak for this. But basically the way we fixed it was by putting out a new power cord for people. when we started shipping a power cord with some kind of, you know, like, I don't know, the word's not coming in my head right now, but, you know, basically like a surge suppressor in the cord. And so we shipped a lot of new cords, but that was actually because of a problem with the power supply in the original Xbox. With the original Xbox, it was all built in, so it didn't have a separate power brick, right? So that, you reminded me of a different story, but the actual bricking of the consoles, I don't remember specif- I don't- I don't remember there being a problem with, like, an Xbox Live or system update that left the machines bricked, which would have been the case that we would have worried about. Yeah. I'm almost out of time. I'm going to take this one last question. I don't want to take away the- the next talk's going to be really good on Qbert, So... Right. So the good thing was the architecture was basically like a PC. So all the early dev kits were PCs. Maybe you saw the early Xbox prototypes. It was this big silver X. It was basically just like laptop motherboards stuck in there in a fancy looking case. So You could do a lot of work on PCs and that's what we did until pretty late in the project. Yeah. Yeah, it's kind of funny because there's a whole business of charging money for dev kits and we're basically shipping people dev PCs but charging them $10,000 and calling it a dev kit, you know, that kind of thing. That wasn't my group. Anyway, I'm out of time. I don't want to take the Qbert guys' time but I definitely want to stay and see them talk. So thank you very much. Thank you.

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*Exported from Journalist Tool on 2026-04-13 | Item ID: 432ce4c2-3795-40be-920d-8c5b0dfa1b10*