E3: The Xbox 360 Conference

Xbox 360 stays strong despite Sony's bombshell a few hours beforehand, but will Microsoft be able to keep its momentum now that word on PS3 is out?

If you asked us last Thursday which of the three hardware companies was winning the buzz war ahead of this week's E3, Microsoft would have come out on top. Thursday's poor showing on MTV - and an even more neutered version that showed in Europe on Friday - turned that tide, losing Microsoft some of the momentum it built over the last few months. And then came Sony's pre-E3 conference.

The frankly stupendous specs of the PlayStation 3 hardware and astounding visual quality of the tech could have done some damage, and it was amid a maelstrom of PlayStation 3 talk that Microsoft kicked off its own presence at E3 2005 with its annual pre-show press conference.

The most striking aspect of Microsoft's show was the sheer showmanship of it all. J Allard, Robbie Bach and Peter Moore had their marketing game faces on, bravely disguising at least some panic as they took to the stage at the Shrine Auditorium in Hollywood just hours after Sony dropped its bombshell.

While Xbox was where Microsoft learned about becoming part of the world of video games, Xbox 360 will be where the lessons learned are put into practise, and to do this the company is focusing on three issues: community, customisation and providing a high-definition experience.

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Like Sony, Microsoft is imagining a future where everyone has a high-definition TV. Xbox 360 is built with this in mind and offers high-definition video signals, surround sound audio and high-speed networking. We'll forget for the moment that both companies are living in a fantasy world, because recent figures show that HD TV penetration is still rather low, especially in Europe, where one estimate puts HD's foothold at a measly 2 per cent.

But gamers care about more than just the newest technology; they also care about their existing collections of games, which is why the news that Xbox 360 will play current Xbox games is so welcome. Frustratingly, Microsoft has only confirmed that Xbox 360 will be backward-compatible "with top-selling Xbox games", which, if taken literally, isn't full confirmation that all Xbox games will play on Xbox 360.

Microsoft has made it clear, though, that looking out for gamers is its number one priority, and part of its strategy to do this is to make sure that it has the games that matter on Xbox 360.

EA, the world's biggest games publisher, has put its impressive weight behind Xbox 360. EA president Don Mattrick joined Peter Moore on stage and revealed that his company has more than 25 games in development for Xbox 360, six of which, including The Godfather and Need for Speed Most Wanted, will be ready for the worldwide launch of the console at the end of this year. EA's brief showing of some of its upcoming titles included in-game footage of Need for Speed Most Wanted running on Xbox 360.

But EA's support, while good, was also a given, and Microsoft's real coup was getting Japanese RPG giant Square Enix on board. Fans of Square Enix's unique brand of role-playing games can look forward to the company's debut on Xbox 360 with the massively MMORPG Final Fantasy XI later this year. Working with Microsoft is a natural fit for Square Enix, which has recently become more focussed on creating absorbing online experiences - an area where Microsoft has trounced Sony in the past.

Microsoft also revealed a host of other new games for Xbox 360, including Blue Dragon and Lost Odyssey, two RPGs from Final Fantasy creator Hironobu Sakaguchi, and sequels for the Test Drive, Project Gotham Racing, Call Of Duty, Dead Or Alive and Ghost Recon series and many more.

For Microsoft, though, Xbox 360 is about more than just games - it's also about fostering a sense of community. The current version of Xbox Live is approaching 2 million subscribers, Allard revealed, and going forward, Xbox 360 will support two new versions of the Xbox Live.

Xbox Live Silver is a free, communication-heavy service that allows you to send text and voice messages and also to visit Microsoft's new online marketplace, where you can get game demos and other downloadable content. The full Xbox Live Gold service takes it to the next step, letting you match up with other gamers online with similar tastes and skills as yours for a healthy session of competitive gaming.

Xbox 360 was also designed with customisation in mind, at both the hardware and software levels. The curved, white casing of the console features a removable faceplate, much like those on mobile phones, that can be snapped off and replaced with something that better echoes your sense of style.

All Xbox 360 games will support custom playlists, so you'll be able to listen to your own music whatever you're playing, and the Xbox Live Marketplace will give you the chance to download - for a fee, in some cases - extra content for your games, like new tracks or levels.

Microsoft said several times during its E3 press conference that its goal with Xbox 360 is to expand the gaming audience, bringing in new people and swelling the ranks to a billion gamers worldwide. These are lofty (actually, ridiculous, considering the geopolitical landscape of the world right now) sights, which are only going to be made more difficult by the strong showing at E3 of Sony's PlayStation 3. As always, it looks like it will be up to gamers to decide.

We'll be bringing you tonnes more on X360, including all the best direct feed video coverage, for free.

Alex Wollenschlaeger & Adam Doree