The Xbox 360 was the first home console to be released in the seventh generation of game consoles and competes against Sony's PlayStation 3 and Nintendo's Wii.

Its Xbox Live service allows players to compete online as well as download games and additional content.

Businessweek magazine compiled a report that estimates the total cost of components in the Xbox 360 premium bundle at US$525 at launch,[16] sans manufacturing costs, meaning that Microsoft initially lost money on every Xbox 360 system sold.

With the launch of the Xbox 360, Microsoft's online gaming service, Xbox Live went through a major upgrade, adding a basic non-subscription service, Silver, to its already established premium subscription-based service, Gold.

Xbox Live supports voice communication along with video communication, a feature possible with the Xbox Live Vision.

Xbox Live Arcade is an online service operated by Microsoft that is used to distribute arcade video games to Xbox and Xbox 360 owners. In addition to classic arcade games, the service offers some new original games as well as games from other consoles.

Dashboard version 2.0.4532.0 allows the Xbox 360 to output video at 1080p and installs support for Zune and the external HD DVD drive attachment.

Only six games were initially offered in Japan, and eagerly anticipated titles like Dead or Alive 4 were not released until several weeks after launch.