Can Microsoft's new console finally end Sony's PlayStation supremacy? Rebecca Armstrong has fun finding out

When Sony launched the PlayStation2 in 2000, a new standard was set in console gaming. The world went crazy for the gaming hardware, with its stunning graphics, amazing games and an in-built DVD player.

When Sony launched the PlayStation2 in 2000, a new standard was set in console gaming. The world went crazy for the gaming hardware, with its stunning graphics, amazing games and an in-built DVD player.

Compared with the sleek lines of the PS2, the Xbox was a bulky black beast. At 300mm x 80mm x 180mm, it dominated any room , and despite the many Microsoft millions that had been thrown towards the Xbox's development, the market failed to bite. Nintendo went on to launch its GameCube a few months later, but the battle lines were drawn.

For the last three years, Sony has remained number one in the consoles market, while Microsoft has languished in second place. This could all be about to change. When Microsoft launches its next-generation console in December, it will finally be leading the field. PlayStation3, it was announced at E3 2005, the games expo that opened yesterday in LA, won't be on sale until spring 2006, and Nintendo's Revolution will follow hot on its heels.

Amid such competition, no one understands the pressure on Microsoft to deliver better than the team of designers and technicians who have been working on Xbox 360 at Microsoft's HQ in Seattle. But what is Microsoft's latest box of tricks actually like?

Named the Xbox 360 because it "puts the gamer at the centre of the universe", the new console is much better looking than its older brother. In the place of the super-sized dimensions and acres of black plastic are sleek curves, a neutral colour and compact design. The man responsible for this makeover is J Allard. "This is the product I've always wanted to build," Allard declares. Like any self-respecting technology fan, he has bought into Apple's design philosophy, and cites the iPod as one of his major influences for the design. "The iPod looks like it's the creation of one person. In reality, thousands of people worked on it. That's the kind of product we wanted to build with the Xbox 360." The final design was a collaboration between a sculptor, Jonathan Hayes, a Japanese agency from Osaka, and the Astro agency behind the launch of Nike watches.

That the console now has a proper "home" page or user interface is another Microsoft innovation. The box itself stands either horizontally or vertically; its controllers are wireless; and its "Ring of Light" around the standby button glows orange when you receive an invite from an online buddy. Like the Xbox before it, the 360 has a hard drive, making it a console that's as powerful as a PC. And the hard drive is removable, so games and music can be transferred directly on to another 360 console.

Microsoft hasn't made any money yet on sales of the Xbox. This, according to Robbie Bach, Xbox's chief officer - or "Xboss", as the sign on his door says - is because they were forced to follow Sony's lead last time: "We were late. We had to develop the Xbox quickly. And that was expensive."

Microsoft knows that, in terms of making back its investment, it needs to sell games. One way that it will be doing this is through online gaming. Currently, 10 per cent of Xbox owners subscribe to Xbox Live, a service that lets gamers compete against each other online. Microsoft's aim is to get 50 per cent of Xbox 360 owners online. They plan for players to build up a GamerCard, an online listing of who you are, how you game, and any other information that you want to include.

Another new development is the Gamer Zone. "You will be able to subscribe to certain 'families' of gamers," says Jeff Henshaw, executive producer of Xbox 360 Platform Software. "So the Pro Zone is for the best of the best - or people who think they're the best! Family Gamers is for people who are mostly playing with kids and family, and there's a Sports Zone."

Gamers will also be able to use prepaid credits to buy games, and can pick up free downloads from games developers at the Xbox Live Marketplace. Dreadful game soundtracks should be a thing of the past, too - there'll be no more bad rock accompanying high- speed laps on a racetrack. The 360 allows music from any portable music-player to be plugged in, so streaming songs from an iPod will be a reality, and has surround sound, so, when playing a shooter, "gamers will be able to hear someone sneaking up behind them", says Peter Moore, senior vice-president of Xbox.

Microsoft's aim is to make gaming more accessible through different levels of difficulty and by releasing titles with broader appeal. Xbox 360 is certainly the star of the E3 expo. But will it finally snatch Sony's crown? When it comes to the fight between the three big players in the games industry, Peter Moore is confident: "We're going to win. We don't do things badly a second time."