But Sony Playstation 2 and Nintendo's Gamecube will be competing with the Xbox.
The price of Playstation 2 has already been slashed to £199.
The Xbox has a built-in hard drive and will have broad-band access to the internet and a DVD player.
Games promised for Xbox include Shrek, Tony Hawk's Pro Skater 2x and Airforce Delta Storm.
And it promises amazing graphics that will blur the line between the virtual and real.