Microsoft's Xbox Launched Amid Fan Frenzy

Hundreds of videogame enthusiasts flocked to New York's Times Square in the small hours of the morning on Thursday, hoping to be the first to grab Microsoft's Corp.'s highly anticipated videogame console, the Xbox.

Analysts expect Microsoft will sell out the estimated 300,000 Xboxes it has shipped for launch within the first day.

The $299 Xbox is the company's first foray into the $20 billion-a-year interactive entertainment business now dominated by Nintendo and Sony.

Microsoft Chairman Bill Gates himself sold the first Xbox console to a 20-year-old who waited 16 hours to be the first to get the prized possession. Bill Gates walked the line of videogamers like a rock star, shaking hands and signing their copies of the game.

Sales of the Xbox and other competing consoles are expected to drive the best holiday season ever for the video game business, despite otherwise uninspiring economic conditions.

Gates' appearance is one of the cornerstones in a $500 million nationwide marketing campaign targeting game players in the aged between 18 and 30.

Part of that strategy has been devoted to making the point that Xbox is the most powerful video game console ever, with a hard drive, broadband Internet connection port and DVD playback capability.

"We're about giving people empowering tools," Gates told Neil Cavuto on Fox News Channel Thursday.

The history of the game business, Gates emphasized, is dictated by the best platform. "Atari was replaced by Nintendo, which was replaced by Sega and now Sony and then Xbox. It's all up to the gamers to sit down and see if they love this stuff. The buzz on this is better than any I've ever seen in our history."

Microsoft has said it plans to ship 100,000 new units to retail throughout North America each week, with a target shipment total of 1 million to 1.5 million units by Dec. 31. Analysts and industry executives have said they expect Microsoft to come in at the lower end of that range.

Influential Morgan Stanley analyst Mary Meeker has suggested Microsoft could lose $1 billion on the Xbox by fiscal 2004 before breaking even, assuming the product sells well.

Reuters contributed to this report.