Just when people thought they had figured out Microsoft's hardball tactics to dominate any market it desires, along comes Xbox.

Development of the sleek new video game console, which arrives in stores Thursday, belies a number of long-held assumptions about the software giant. Rather than imposing rigid conditions on other software makers, Microsoft is playing nicely with its new partners in the game business. And instead of appealing to a narrow segment of business decision-makers, it's courting finicky consumers.

Of course, Microsoft has been forced to adopt this kinder, gentler approach out of necessity. The gaming market is fundamentally different than PCs in three key areas:

• There are few, if any, tangible ways that Microsoft can leverage its Windows dominance to encourage developers to create games.

• It's a relatively mature market that is dominated by powerhouses Sony and Nintendo, which have proven expertise in creating slick hardware and software.

• Third-party game developers wield make-or-break power over console makers.

Because of these differences, newcomer Microsoft is clearly the underdog. But as scores of competitors in markets from e-mail to browsers to database software can attest, never discount a company with a $30 billion war chest and Bill Gates at the helm.

And don't assume Microsoft can't adjust to new realities.

Has Xbox transformed Microsoft?
After two decades of primarily relying on business customers, the software giant is trying to turn at least part of itself into a fun consumer operation. Can the company pull it off?

Game selection key to Xbox's chances
Microsoft has a fairly strong roster of titles to accompany the Xbox's launch. Success, though, depends on a breakthrough title that will appeal to people beyond the hard-core gamer.

A $500 million gamble
Like other console makers, Microsoft is subsidizing the cost of the console and hoping to recover its expenses through sales of game software. But the strategy isn't without risk.