The Xbox 360 is the second video game console produced by Microsoft, and was developed in cooperation with IBM, ATI, and SiS. The integrated Xbox Live service allows players to compete online and download content such as arcade games, game demos, trailers, TV shows, and movies. The Xbox 360 is the successor to the Xbox, and competes with the PlayStation 3 and the Wii as part of the seventh generation of video game consoles.

The Xbox 360 was officially unveiled on MTV on May 12, 2005, with detailed launch and game information divulged later that month at the Electronic Entertainment Expo (E3). The console sold out completely at release (with the exception of Japan) and, as of February 22, 2008., 19 million units have been sold worldwide according to Microsoft. The Xbox 360 comes in three different versions, the "Arcade" console, the "Premium" console, and the "Elite" console, each having its own selection of included and available accessories. Another version of the Xbox 360, called the "Core" which was available from launch, has since been discontinued for retail and replaced with the "Arcade".

Known during development as Xenon, Xbox 2, Xbox FS, Xbox Next, or NextBox, the Xbox 360 was conceived in early 2003. In February 2003, planning for the Xenon software platform began, and was headed by Microsoft vice president J Allard. That month, Microsoft held an event for 400 developers in Bellevue, Washington, to recruit support for the system. Also that month, Peter Moore, former president of Sega of America, joined Microsoft. On August 12, 2003, ATI signed on to produce the graphic processing unit for the new console, a deal which was publicly announced two days later. The following month, IBM agreed to develop the triple-core CPU for the console. Before the launch of the Xbox 360, several alpha development kits were spotted using Apple's Power Mac G5 hardware. This was due to the system's PowerPC 970 processor running the same PowerPC architecture that the Xbox 360 would eventually run under IBM's Xenon processor.

The Xbox 360 is available in three standard variants; the "Xbox 360 Arcade", the "Xbox 360 Premium", and the "Xbox 360 Elite". A discontinued SKU, the "Xbox 360 Core", was replaced by the "Xbox 360 Arcade" in October 2007.

At launch, the Xbox 360 was available in two configurations: the "Xbox 360 Premium" package, priced at US$399 or GB£280 , and the "Xbox 360 Core", priced at US$299 and GB£199. The original shipment of the Premium version included a cut-down version of the Media Remote, but this was removed from later shipments. The Elite package was launched later at US$479, and the "Xbox 360 Arcade" replaced the "Xbox 360 Core" in October 2007 at US$279.

The Xbox 360 Core was an entry level Xbox 360 priced at US$279.99. The "Core" is no longer being sold, being replaced by the Xbox 360 Arcade. It was not originally available in Japan, but was later released on November 2, 2006. The Core system came bundled with composite video cables, capable of only SDTV resolutions, but newer models with lot number 0728 or greater have an HDMI 1.2 output. The Core may output HD signals up to 1080p when connected to separately sold HDMI, Component, or VGA cables. It may also utilize a separately sold 20 or 120 GB hard drive. Unlike all other SKUs, it shipped with a wired version of the Xbox 360 controller, instead of the wireless version found in other SKUs.

Xbox 360 ArcadeThe Xbox 360 Arcade, priced at US$279.99, is the replacement for the "Xbox 360 Core". It was publicly revealed (though it was available in stores far earlier) by Microsoft's president of Entertainment Devices division Robbie Bach to the Financial Times on October 18, 2007, and officially announced on October 22, 2007. It includes a wireless controller, 256 MB memory unit, composite AV cable, HDMI 1.2 output, and 5 Xbox Live Arcade titles. The consoles, identified by packaging labeled "Go Play!", are bundled with Boom Boom Rocket, Feeding Frenzy, Luxor 2, Pac-Man Championship Edition, and Uno on a single disk, which also includes a "Welcome Video" and several game trailers/demos.

The Xbox 360, commonly called the Premium or Pro, currently priced at US$299, includes all the features of the Xbox 360 Core and includes a hybrid composite and component cable with optional optical out instead of a composite cable. The Xbox 360 also includes a detachable 20 GB Hard Disc Drive to store downloaded content, provide compatibility with original Xbox games, and store game data. The included hard drive comes with game demos, video clips and a free Live Arcade game, Hexic HD. In July 2007, this version of the Xbox 360 began appearing with the Zephyr motherboard (the motherboard used in the Elite) which features HDMI 1.2 output and an improved GPU heatsink. Although the Premium package does include an HDMI 1.2 output, it does not come with HDMI 1.2 cables. Starting at the end of September 2007, the newest systems were shipped with the new "Falcon" motherboard. This motherboard includes the new 65-nm CPUs, making them quieter and cooler than the older systems. Holiday 2007 consoles, with packaging labeled "Go Big", were bundled with Marvel: Ultimate Alliance and Forza Motorsport 2. This bundle has since been discontinued. Starting in early August 2008, the 20 GB Premium Xbox 360 will be discontinued and will be replaced by the 60 GB HDD model. The 60 GB Premium version will retail for US$349.99

The Xbox 360 Elite is the fourth and most expensive variation of the console. It is priced at US$449.99 and includes a 120GB hard drive and a matte black finish. The Elite retail package also includes an HDMI 1.2 cable and a controller and headset that match the system's black finish. The initial release price was US$479.99, C$549.99, £299.99, and AU$729.95. The Elite was released in Europe on August 24, 2007, and Australia on August 30, 2007. Holiday 2007 consoles, with packaging labeled "Go Big", were bundled with Marvel: Ultimate Alliance and Forza Motorsport 2. This bundle has since been discontinued. Early Elite models shipped using the Zephyr motherboard, though newer models now use the Falcon 65nm chipset instead. These Elites (and other Xbox 360 models using the Falcon) can be identified from earlier versions by a re-designed power connector and a power supply that runs at 175w. The motherboard layout is also different.

Special editions
On a few occasions, Microsoft has produced special editions of the console, usually to coincide with the release of a major product. These special editions are typically custom-colored Xbox 360 models, and are produced in limited numbers.

At the E3 2007 press conference, Microsoft announced the Halo 3 Special Edition of the console, released September 16, 2007. It sports a Halo 3 theme on the console, wired headset, and wireless controller, and play and charge kit. Other than the unique "Spartan green and gold color scheme, exclusive dashboard theme and downloads, and a HDMI port, its features are identical to that of the Premium system. It is priced at US$399.99 and £279.99 (the original price of the Xbox 360 Premium).
To promote The Simpsons Movie, Microsoft created a specially-designed, yellow Xbox 360 console. This configuration is based on the Xbox 360 Premium package, with the only difference being the color scheme of the Xbox 360 console and wireless controller. The consoles were to be given out to winners of drawings taking place between July 18, 2007 and July 27, 2007, in which a name was randomly drawn each day in the "10 Days and 10 Chances to Win" sweepstakes. This edition is limited, as 10 consoles were produced.

Compatibility
The Xbox 360 is also compatible with the Zune, which was posted on the Xbox Official Website. The Xbox 360 can play media files from the Zune only from an Xbox 360 update available on Xbox Live or from the Xbox 360 Official Website. It is also compatible with Apple's iPod by being able to play MP3 files natively and unprotected AAC files through the installation of the Optional Media Update available for free on Xbox Live. Protected AAC files are not supported. The Xbox 360 will use the iPod's database for media information and works with both Windows (FAT32) and Mac (HFS+) formatted iPods. Pictures stored on the iPod can also be viewed but Videos (protected or unprotected) and Podcasts are not supported.

Hardware
Main article: Xbox 360 hardware
The main unit of the Xbox 360 itself has slight double concavity in matte white or black. It features a port on the top (when vertical, left side when horizontal) to which a custom-housed hard drive unit can be attached in sizes of either 20, 60(August 2008 on) or 120 GB. Inside, the Xbox 360 uses the triple-core IBM designed Xenon as its CPU. Graphics processing is handled by the ATI Xenos which has 10 MB of embedded eDRAM. Its main memory pool is 512 MB in size.

Accessories
Main article: Xbox 360 accessories
Many accessories are available for the console, including both wired and wireless controllers, faceplates for customization, a wireless steering wheel for playing racing games, headsets for chatting, a webcam for video chatting, Dance Mats and Gamercize for exercise, a HD DVD player (now discontinued), three sizes of memory cards, and three sizes of hard drives (120GB, 60GB(August 2008 on) and 20GB), among other items, all of which are styled to match the console.

The Xbox 360 can be subject to a number of technical problems. Since the console's release in 2005, the product earned note in the press questioning its reliability and failure rate of the consoles.

To aid customers with defective consoles, Microsoft has extended the Xbox 360's manufacturer's warranty to three years for hardware failure problems that generate a "General Hardware Failure" error report. A "General Hardware Failure" is recognized by three quadrants of the ring around the power button flashing red. This error is often known as the "Red Ring of Death". The warranty extension is not granted for other (fatal) errors that can occur that do not generate this specific error code.

Since these problems surfaced, Microsoft has attempted to modify the console to improve its reliability. Modifications include a reduction in the number, size and placement of components, and the addition of dabs of epoxy on the corners and edges of the CPU and GPU, as glue to prevent movement relative to the board during heat expansion, and a second GPU heatsink to dissipate more heat. It is unclear whether these modifications have only been added to new consoles, or if they have also been added to consoles repaired by Microsoft and authorized repair centers. As of 2008, these modifications have yet to fully cure the Xbox 360's reliability issues.

At the 2008 Game Developer Conference, Microsoft announced there would be over 1000 games available for Xbox 360 by the end of the year. The 2007 Game Critics Awards honoured the Xbox 360 platform with 38 Nominations and 11 Wins - more than any other platform. 33 Xbox 360 titles have now sold over a million copies. By March 2008, the Xbox 360 had reached a software attach rate of 7.5 games per console -- a record for any console in history, in EU the rate was 7.0 while its competitors were 3.8 (PS3) and 3.5 (Wii).

The Xbox 360 launched with 14 games in North America and 13 in Europe. The console's best-selling game for 2005, Call of Duty 2, sold over a million copies. Five other games sold as well in the console's first year in the market: Ghost Recon Advanced Warfighter, The Elder Scrolls IV: Oblivion, Dead or Alive 4, Saints Row and Gears of War. Gears of War would become the best-selling game of the console with 3 million units, before being surpassed in 2007 by Halo 3, with 8.1 million units.

Six games were initially offered in Japan, and eagerly anticipated titles such as Dead or Alive 4 and Enchanted Arms were released only a few weeks later. Games more suitable to the region were planned or have since been released, such as Chromehounds, Ninety-Nine Nights, and Phantasy Star Universe. Microsoft also had the support of RPG developer Mistwalker, founded by Final Fantasy creator Hironobu Sakaguchi. Mistwalker's first game, Blue Dragon, was released in 2006 and had a limited-edition bundle which sold out quickly with over 10,000 pre-orders. Blue Dragon became the best-selling Xbox 360 game in the region, with over 200,000 units. Mistwalker's second game, Lost Odyssey also sold over 100,000 copies.

The Xbox 360 began production only 69 days before launch. As a result, Microsoft was not able to supply enough systems to meet initial consumer demand in Europe or North America. Many potential customers were not able to purchase a console at launch. Forty thousand units appeared on eBay during the initial week of release; this was 10% of the total supply. By year's end, Microsoft had shipped 1.5 million units, including 900,000 in North America, 500,000 in Europe, and 100,000 in Japan.

At E3 in May 2006, Bill Gates announced that Microsoft would have a head start of 10 million units by the time Sony and Nintendo entered the market. Microsoft later specified that goal and estimated shipments of 10 million units by the end of 2006.

Cumulative sales from the system's launch until June 30, 2007 were predicted to reach 12 million units, down from 13 to 15 million units estimated earlier. Being released one year ahead of its competitors, the Xbox 360 was the market leader throughout the first half of 2007. However on September 12, 2007, it was reported by the Financial Times that the Xbox 360 had been surpassed by the Wii in terms of worldwide console sales. On October 4, 2007, soon after the launch of Halo 3, Microsoft stated that Xbox 360 sales had more than doubled compared to the previous average.

Based on figures from October 19, 2007, the Xbox 360 outsold the Wii for the month of September in North America, helped in part by the spike in sales seen after the launch of Halo 3, which sold 3.3 million copies in the United States in a 12-day period. The Xbox had sales of 528,000 units for September, while the Wii had sales of 501,000 units.

However, despite these sales figures, Microsoft's gaming division is losing money. Through 2005, the Xbox gaming division had lost over $4 billion. However, Microsoft expects the console will start making money in 2008. The losses are due to the market strategy of selling consoles below cost in order to obtain market saturation and gain profits on software and peripherals that have a much higher profit margin. Also notable is that Microsoft has taken a charge of $1 billion dollars on its June 2007 Income Statement to account for the cost of replacing bricked Xbox 360s.

In Europe, the Xbox 360 sold 2 million units in 2006 and 1.9 million in 2007 according to estimates by Electronic Arts. In 2007, the Xbox 360 had sold 4.62 million units in the US according to the NPD Group, and 257,841 in Japan, according to Enterbrain. On May 14, 2008, Microsoft announced that 10 million Xbox 360s had been sold and that it was the "first current generation gaming console" to surpass the 10 million figure in the US. In the US, the Xbox 360 has sold 10.08 million units as of May 1, 2008, according to the NPD Group. In Japan, the Xbox 360 has sold 602,558 as of March 30, 2008, according to Famitsu/Enterbrain.

On February 13, 2008, Microsoft announced that the Xbox 360 suffered shortages in the US in January 2008, possibly continued into February. Prior to the release of the NPD Group's video game statistics for January 2008, the Xbox 360 has been in second place behind the Wii in US sales in most months since the Wii and PS3 were released, according to data by the NPD Group.