Back in 2006, Microsoft’s struggling attempts to make Xbox the dominant name in home console entertainment was handed an utter gift by Sony. The Japanese giant followed up the all-conquering PS2 with the PlayStation 3 — a huge, bulky, and tough-to-code-for console that somehow cost between ~NZ$159 and ~NZ$478 more than the Xbox 360. Microsoft duly took advantage and sold roughly the same number of consoles that generation, making it all to play for when the Xbox One took on the PS4.

It turned out all this meant was that it was Microsoft’s turn to make a bunch of unforced errors and gift a console generation to its rival. Documents submitted to Brazil’s national competition regulator reveal that Sony “sold more than twice as many Xbox in the last generation,” according to Game Luster’s translation

Given Sony has sold around 117.2 million PS4s to date, Microsoft must have offloaded, at most, 58.6 million Xbox one machines. That puts it somewhere between the Nintendo NES and SNES consoles released in 1983 and 1990 respectively — long before gaming had become a truly mainstream hobby. 

How did it all go so badly wrong? Gather round, reader, for a story of ridiculous hubris and then a sudden change of strategy to make things a bit more respectable. 

For a reminder of how badly one company can blow a generation’s worth of goodwill in an hour, look no further than the official E3 unveiling of the Xbox One, which is where it all began to go wrong

It’s all there. The confirmation that you would need to buy Microsoft’s expensive yet nearly pointless Kinect hardware to play. The requirement of an internet connection sign in every 24 hours to check in with Microsoft’s servers. Worst of all: the news that any game you bought would be digitally tied to your account thanks to the most egregiously overreaching Digital Rights Management the world has ever seen. 

Microsoft tried to backtrack on this, revealing a convoluted deactivation process that would allow you to loan games to friends or sell them on. It was an open goal for Sony, which happily rolled the ball into the empty net:

Unsurprisingly, the DRM stuff was gone by launch time, as was the requirement to connect to the internet every 24 hours. But the reputational hammering was fresh in the memory, and the white elephant of Kinect would hang around for a whole year while the PS4 pulled further and further ahead. Microsoft would announce a model without Kinect in 2014, and then take Old Yeller round the back once and for all three years later to no outcry from anyone, anywhere.

The early failures did at least give us some seriously good innovations as Microsoft desperately tried to play catch up — innovations that would set Microsoft up strongly with the current generation. Games Pass is the best value proposition in gaming, giving you a kind of ‘Netflix of games’ for a monthly subscription. Its commitment to backwards compatibility was also kicked off during the Xbox One years, meaning that you can play a number of OG Xbox and Xbox 360 games on your brand new Xbox Series console, along with almost every Xbox One game.

But if it weren’t for the early mistakes, Sony’s PlayStation brand could be on the ropes now, rather than more dominant than ever. It’s an invaluable lesson in giving customers what they want rather than what shareholders believe they should.