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unveiled its new video-game machine Thursday night, launching the latest version of the console wars.

The technology giant, which debuted the offering in a flashy MTV infomercial, is hoping its new machine, dubbed the Xbox 360, will help reverse years of losses in the video-game business and help it catch up with industry leader




But the company left unanswered several key issues that will go a long way in determining the success of the device.

For instance, Microsoft didn't say in its promotional materials whether the Xbox 360 will be able to play games designed for the original Xbox. While the Xbox has been a distant second to Sony's PlaySation 2 in the current generation of consoles, Microsoft has still sold millions of the devices.

Console sales tend to be dependent in large part on the number of games available for them. Part of the success that Sony had with its PlayStation 2 was that it drew in a wide group of developers for the console -- and that the console was able to build on the success of the original PlayStation by being backward compatible with it.

Of course, backward compatibility is not mandatory for success.


, for instance, has remained a powerhouse in the industry even though its new devices have not been able to play games made for its older machines.

But without a built-in library of titles, the Xbox 360 will likely need either an exclusive hit title or a wide array of high-quality new games to draw in new users.

The company did tout an impressive list of publishers who will support the device. And the game clips shown on the infomercial were impressive in their near-photo-realism. But the company didn't say how many titles will be available at or near the launch of the console.

Perhaps more troubling, Microsoft didn't reveal whether or when a new version of


will be available for the device.

Developed by Microsoft's own Bungie Studios, the Halo franchise is exclusive to the Xbox and has been the most popular set of games for the device;

Halo 2

was the second-best-selling game last year for the entire industry. Many analysts have considered the Halo games to be the only must-haves for the Xbox and say that those games alone have driven much of the sales of the current console.

One of the key features of the Xbox 360 is the high-definition format of its games. Sales of HD televisions -- particularly of flat-panel displays -- have been picking up steam in the last couple of years. And with a congressional mandate that all broadcast signals soon be in HD format, HD televisions could soon dominate the marketplace.

But the majority of Americans still have standard definition televisions, meaning that the HD features in the Xbox 360 may not be much of a draw for many gamers.

And then there's the question of price. Microsoft has not yet set a price for the Xbox 360, but analysts have suggested it might reach $500. The current generation of consoles started off with a base price of about $300; they are currently selling for about $150 or about $100 for Nintendo's GameCube.

Given the features of the Xbox 360, Microsoft may figure that it can charge a premium for it. Regardless, the company is likely to lose money on hardware sales even at that level.

But beyond the hardcore gaming audience, the market for a premium-priced console could be limited, even for one with the features of the Xbox 360. And further complicating matters could be the competition. Analysts suspect that Sony, for instance, may cut the price of its PlayStation 2 in an attempt to undermine sales of the Xbox 360.

How the new device fares could also have a large impact on video-game publishers and developers such as

Electronic Arts


, which have already begun sinking money into developing games for the Xbox 360 and upcoming next-generation consoles from Sony and Nintendo.

Microsoft unveiled the Xbox 360 in an infomercial hosted by Elijah Wood, who starred as Frodo in the

Lord of the Rings

movie trilogy. Interestingly, the infomercial seemed to spend almost as much featuring the Killers, a band that entertained the launch party guests, as it did giving actual specifications on the new device.

That said, gamers may find a lot to like about the new device, which Microsoft plans to have on store shelves by the holiday season.

The console will have a custom



Power PC processor, a special graphics processor from

ATI Technologies


and a 20-GB hard drive that users can remove and upgrade.

Beyond the hardware, Microsoft is touting a number of features of the device, including its networking and multimedia capabilities. All games for the Xbox 360 will be in high-definition television format. The device will have a built-in Ethernet port to connect to the Internet and home networks. Gamers can use the Internet connection to connect with Xbox Live, Microsoft's online game service. They can also use the network connection to play movies, music and videos from connected PCs.

Among the titles that will be available for the Xbox 360 are

Need for Speed Most Wanted


Madden NFL

football from EA and a new Tony Hawk skateboarding game from






and Microsoft will also be rolling out new titles for the device.