Former vice president Joachim Kempin has revealed that Microsoft got into the console business primarily to take on and defeat Sony – after Sony denied Microsoft’s interest in partnership.
According to Kempin, Microsoft set about creating the Xbox hardware so that Sony didn't achieve the kind of dominance on televisions that Microsoft enjoyed on PC.
"Sony was always very arm's length with Microsoft," Kempin told IGN. "Yeah, they bought Windows for their PCs but when you really take a hard look at that, they were never Microsoft's friend. And Microsoft in a way wanted them to be a friend because they knew they had a lot of things we could have cooperated on because they are, in a way, an entertainment company, you know? I mean, at least a portion of Sony is and they had some really good things going there, but as soon as they came out with a video console, Microsoft just looked at that and said 'well, we have to beat them, so let's do our own.'"
Kempin added that after the company failed to find a PC manufacturer to build the new console, they took to the job themselves – basing it off of what it had learned from Sony.
"The [PC manufacturers] were smart enough not to bite, because they studied the Sony model and saw that Sony could not make money on that hardware model, ever," Kempin said. "So they supplemented it with software royalties, and Microsoft copied that model."