Xbox 360 looks nothing like its bulky, black predecessor. It's sleek and white, and it can stand on one end like a book or lie flat like a DVD player. Its 20-gigabyte hard drive and three powerful processors will enable high-definition graphics and surround sound, making games seem more like movies.
Mike Sabine, a market analyst with International Development Group, raved about the lifelike look of a war game he saw in a recent preview offered to analysts and reporters.
"I actually expected to be a little underwhelmed," he said. "I expected it to be a leap or two better (than the original Xbox), but I was very impressed."
Another game Microsoft demonstrated featured NBA star LeBron James, his muscles flexing and his shiny tank top rippling in the light of a street lamp as he dribbles and shoots.
"Honest to goodness it was almost as good as video," said Van Baker, vice president and research director for Gartner Inc.
Though Microsoft had planned on giving consumers their first peek at Xbox 360 in a half-hour MTV special Thursday night, some of the 200 people who attended the show's taping a week ago leaked pictures and specs on gaming Web sites and blogs last weekend.
The MTV debut is part of Microsoft's strategy to outshine rival Sony Corp., which is not expected to release the next version of PlayStation until next year. Sony is expected to unveil a working version of PlayStation 3 and announce launch plans at the Electronic Entertainment Expo gaming trade show in Los Angeles next week.
Microsoft says Xbox 360 will arrive in North American stores around Thanksgiving and in Europe and Japan by year's end. Analysts said several months of lead time could help the new Xbox close in on the market-leading PlayStation, but they're waiting to see what Sony rolls out before making any bold predictions.