 This is amazing. It's recently been reported by Bloomberg that, back before entering the video game market with the Xbox, Microsoft attempted to get a leg up over Sony by simply buying Nintendo, the whole company. The response, according to Microsoft's Ken Bacchus, was, they just laughed. Like, imagine an hour of somebody just laughing at you. That was kind of how the meeting went. Nintendo wasn't even Microsoft's first choice, and it wasn't their last choice either. They also tried to purchase EA, Midway and even Square. According to Bloomberg, the idea for the Xbox originally came about because Microsoft was petty. Sony had announced the PlayStation 2 and suggested that it would compete with the traditional PC. Microsoft took this personally, said Bacchus. Sony coming out and saying, PlayStation 2 is going to redefine the computer world, that got attention inside of Microsoft. So Microsoft began building prototypes. Things did not exactly go well. Some members of the early team referred to the console as the coffin box because they expected it to flop and end their careers. The initial plan was to create a console that was essentially a PC, running the Windows operating system. When this proved to be a bit of a disaster, the company was ready to scrap the entire project. Then, says Ed Fryes. One of the vice presidents who had been quiet the whole time asks this question, what about Sony? So that basically stopped the room. And the way I remember it is, it got quiet for a second, and then Bill Gates got that funny kind of look he gets when he's thinking and said, what about Sony? And he turns to Steve Bulma and Bulma said, what about Sony? So solely in an effort to one up Sony, Microsoft continued work on the Xbox. While the hardware was definitely a challenge, the bigger problem was that they didn't have any games. Their first port of call was electronic arts, but due to Microsoft's lack of experience, it was hard to convince EA to make games for them. Said Bacchus, we met with EA a half dozen times. They reminded us Microsoft had a habit of putting its toe in the water and when things didn't work out, they would abandon the market and pretend like it never happened. That's all fine and good for Microsoft because it would be a rounding error on our balance sheet, but for a company like Electronic Arts. Now there's no platform and their software is no good. Larry kept saying, I want to know who gets fired if it fails. So, unable to convince EA to make games for the Xbox, Microsoft went to Plan B, attempt to simply buy the entire company. This was rejected with a simple, no thanks. With EA out of the picture, Microsoft set its sights on Nintendo. Said Bob McBreen. We actually had Nintendo in our building in January 2000 to work through the details of a joint venture where we gave them all the technical specs of the Xbox. The pitch was their hardware stunk and compared to Sony PlayStation, it did. So the idea was, listen, you're much better at the game portions of it with Mario and all that stuff. Why don't you let us take care of the hardware? But it didn't work out. When Microsoft had recovered from being laughed at by Nintendo for an hour, they set their sights on the flagging square. This deal actually almost went through, but Square pulled out at the very last minute. Said McBreen. We had a letter of intent to buy Square. In early November 1999, we went to Japan. We had one of those big dinners with their CEO and Steve Ballmer. The next day, we're sitting in their boardroom and they said, Our banker would like to make a statement. And basically the banker said, Square cannot go through with this deal because the price is too low. We packed up, we went home, and that was the end of Square. The only large company that Microsoft spoke to that actually did want to be acquired was Midway. Microsoft ultimately decided though that they really just needed a games developer and Midway would come with a lot of business resources such as their sales and marketing team that weren't really necessary. So in the end, Microsoft launched their console having only acquired one studio of note, a small team called Bungie, who had made a first person shooter known as Halo. This single game helped ship millions of Xboxes and while its first generation ended up proving very costly, today Microsoft makes 11 billion a year from video games. The moral of the story? From Microsoft's perspective, complete incompetence and a lack of understanding can be overcome if you have enough money to throw at all your problems. The better moral comes from Nintendo's point of view. Sometimes no amount of money is worth giving up on your dreams. Despite having far, far fewer resources than Sony or Microsoft, Nintendo continues to be a world leader in the gaming industry thanks to their creativity, hard work, and willingness to stalk anyone who causes them too much trouble. But that's a story for another day.