Since programmers didn't like the XBox when is was announced, Microsoft bought a bunch of companies to make exclusive games, such as Bungie and Rareware.
Also, the system in competition with the Playstation 2 for people who only buy EA sports games.
A 733MHz Intel Pentium III processor and nVidia GPU combined with a regular 3.5" desktop hard disk drive and a modified Windows 2000 operating system constitute a PC by another name, but, perhaps, smells sweeter.
The result - a hot, noisy and (as noted above) OMG HUGE!!!1 LOL - console, but one with remarkable gaming power which secured a solid second place next to Sony's somewhat overhyped PlayStation 2. While the PS2 took the lion's share of the market in the fourth-generation console wars it was far from the walk over predicted in the popular press and Microsoft easily displaced Nintendo who were, a priori, predicted to take a comfortable if disappointing second place position.
The XBOX 360 has broken the trend somewhat, ditching the PC architecture and Windows-derived operating system in favour of something much more console-like (and sadly less OMG HUGE LOL!!!1) and, ariving a year earlier to market than the currently missing-in-action PlayStation 3 may yet provide Microsoft with the dominant position in console gaming. But at this stage the smart money is on a three way tie in the fifth generation console gaming market.