On Tuesday, Microsoft revealed the Xbox One, giving us a broad but only partial understanding of its upcoming video game console. Here’s what we’ve learned so far, and my take on Microsoft’s third stab at jumpstarting a major new market for living room entertainment.

First, be sure to check out a few articles to set the context.

Here Comes the Next Xbox – This is the news article I wrote about the Xbox One before the launch, in which I spelled out what I had heard about this device ahead of time. I’ll examine where the actual reveal matches (and doesn’t match) what I wrote then.

Microsoft Reveals Next-Gen Console, Xbox One – This is the news story I wrote this week about the Xbox One reveal.

Xbox One Photos and Xbox One Unveil Video both provide a peek at Microsoft-sanctioned visuals of the new console, which are important because I’ll be discussing the look and feel of this new device.

Ready? OK, let’s dive in.

Yes, the operating system is really Windows

Microsoft made a point of describing the Xbox One’s operating system as “three OSes in one,” diving down a rabbit hole that has unnecessarily confused people in and out of the press. But the OS is just Windows, and I really think they are describing it in this way to both over-emphasize the technical achievements that are occurring at a low level and, frankly, to distance this device from the poor reception to Windows 8. Folks, this thing just runs a modified version of Windows 8. And I can prove it.

Here’s how: It’s using Hyper-V. This is Microsoft’s virtualization platform and---wait for it—it runs only on Windows, Windows 8 in this case. (The standalone Hyper-V product is of course just the parts of Windows needed by the virtualization platform.) Microsoft’s description of this “three OSes in one” is no different than the way you could describe a Windows 8 PC that had a VM running in Hyper-V; that too is arguably three OSes on one: Windows 8, Hyper-V, and the VM OS. But on the Xbox, what we see is “the best of [the] Xbox OS with deeper access to the hardware, the kernel of Windows (i.e. Windows), and some unnamed glue (Hyper-V) which “connects them, providing instant switching, multitasking” and so on. This is a Hyper-V system. It’s Windows.

There are questions of course. Will this Windows base provides some form of app compatibility with Windows 8/RT, which would be a huge boon to developers? And will it provide some form of device compatibility, which would dramatically enhance the versatility of the console? We’ll have to wait and see.

Backwards compatibility

As expected, the Xbox One is not backwards-compatible with Xbox 360 games. I had previously reported that Microsoft would ship a new Xbox 360 console—codenamed Stingray—later this year, and at the Xbox One reveal event, the firm said they would have more news about the future of the 360 at E3 in June. Expect a Stingray announcement then.

My take on this is that backwards compatibility is not an issue. It’s more important for this box to be as technically excellent and future proof as possible than it is for Microsoft to waste time and engineering resources on such a thing. Every Xbox fan has at least one 360, and the new console will be inexpensive enough to keep that market going for a few more years and give upgraders a cheap way to continue playing their existing game libraries.

Form factor

Let me just say it outright: The Xbox One looks big, heavy, and ungainly. It is everything that Surface is not, and it appears to have been fashioned from a slab of boring, uninteresting plastic. That said, I will give Microsoft some credit for not falling for some fashion-of-the-day design as it did with the original Xbox 360—which might be described, politely, as being “Apple white”—and just not worrying about something that, frankly, is not that important at all.

Hardware

While the underlying hardware in the Xbox One has been the source of many rumors over the past year or so, this is an area I’ve never been particularly interested in: We’ve always known that the new Xbox could have killer, next-gen hardware (for a console). And it does.

The Xbox One features custom AMD CPU and GPU chips. The former is a sort-of-thin 40-nanometer x64 design with 8 processor cores. It has 8 GB of RAM (compared to 512 MB in the Xbox 360), a 500 GB hard drive, two USB 3.0 ports, 802.11n Wi-Fi, HDMI passthrough (for interoperability with your cable TV set-top box) and HDMI-out.

Intriguingly, the Xbox One also includes Wi-Fi-Direct, which provides a peer-to-peer wireless network between devices. It’s not clear which devices will work with the Xbox One yet.

The Xbox One ships with a third generation Kinect sensor—there is only one version of the console and Kinect is no longer optional—which handles the console’s voice- and hand gesture-based controls. This new Kinect sensor includes a 1080p front-mounted camera with a wide-angle lens that will hopefully be more usable in normally-sized living rooms. (The first-gen Kinect for Xbox 360 requires a McMansion-sized living to work effectively.)

The Xbox One also includes a modified version of the Xbox 360 hand controller, which I consider to be the single best hand controller ever made. This new version features an integrated battery and new vibration triggers. And “over 40 technical and design innovations,” according to Microsoft. I’m sure its fantastic.

Blu-Ray optical drive

As promised the Xbox One ships with a Blu-Ray optical drive, which will provide access to both Blu-Ray movie discs and games. For the latter, a game is installed to the console hard drive automatically the first time it is insert—this is optional and actually pretty hard to find on the 360—and then you won’t have to use the disc to play again in the future, which is new to this console.

Microsoft didn’t say this explicitly, but my understanding is that the Xbox One will “lock” a game disc to a console so you can’t share with friends. That said, I also believe that you can unlock the disc for a small fee so you can resell it in the used marketplace. More on this as details develop.

Always on

Yes, the rumors were true: The Xbox One does require an always-on Internet connection. But no, the rumors were also (somewhat) false: You don’t technically need to be connected every minute of every day. Instead, Xbox One looks for an Internet heartbeat from time to time and uses its Windows 8-based power states to find and download OS and game title software updates even while the console is “off.”

Dashboard

If you’ve been following along with the evolution of the Xbox 360 user interface, called the Dashboard, you will immediately recognize that Xbox One UI as being an obvious evolution of that work. And that’s good news: The Metro-style, tiles-based Xbox One Dashboard looks to be as easily navigated and usable as the current version, though it’s been updated with some nice touches, most of which appear to be related to user personalization.

The big news with the Dashboard in many ways is that it’s can now actually multitask, thanks to that Windows 8 Core OS. You can move instantly between multiple running experiences, including a game, a TV show or movie, a music playlist, or whatever, with no lag at all. (At least as demonstrated.)

Snap mode

You know that silly Snap mode that’s part of Windows 8 that everyone makes fun of? It’s in the Xbox One too, and it will let you use two user experiences—a game and Skype, say, or live TV and the ESPN app—side-by-side on the screen. The version Microsoft showed off at the reveal event looked like the one in Windows 8, where the secondary app gets only a tiny slice of onscreen real estate, but I expect the version in the shipping console to work like Snap does in Windows 8.1 and provide more options around how much space each experience gets. Stay tuned.

Xbox LIVE

If you were hoping for Microsoft to stop raking its best customers over the financial coals each year with the unnecessary extra expense of an Xbox LIVE Gold subscription, sorry, but that’s not happening: Virtually all of Xbox One’s best features will in fact require this subscription, just as is the case today with the Xbox 360. That said, there’s some good news.

First, the functionality of the discontinued Xbox LIVE Family Pack is making a triumphant comeback, if a report from Polygon can be believed: Members of a household will be able to share a single Xbox Live Gold subscription, so you can create a user account on the Xbox One for each family member and everyone can access all the features. Today, each user account on the Xbox 360 requires its own Xbox LIVE account. “We want to make sure that you and your son both have your own account,” Microsoft’s Ben Kilgore told Polygon, describing a father and son sharing an Xbox Live Gold membership. “We want you log in to get your stuff, and when he logs in to get his stuff. On that console, if you have Gold, he can use Gold as well.”

And as it has done in the past with such things as online matchmaking, Microsoft has moved features from individual games into the broader Xbox LIVE ecosystem and is making them available to all games. In this vein, Xbox LIVE will allow Xbox One users to record, edit, and share gameplay from any game as part of a new Game DVR service. And a new Smart Match service will allow Xbox LIVE to dynamically match players with each other as time goes on, not just once at the beginning of a new play session.

Skype

Xbox users have been waiting for a first class Skype experience for years, but it’s suddenly obvious that such a thing requires the multitasking prowess of the Xbox One. And Microsoft is delivering: It described the Skype experience on Xbox One as the only living room experience for Skype group video calls on your HDTV. Skype works in Snap mode, provides pop-up notifications, and will serve as the underlying communications infrastructure for the console. Awesome.

Television

In addition to the usual stable of entertainment apps like Netflix and Hulu Plus, and as an alternative to the Xbox 360’s rarely-used Media Center Extender functionality, Xbox One offers cable (and satellite)-based access to live and recorded TV. You connect the console to your cable box using the HDMI passthrough and can then access a nice (and Media Center-esque) program guide, with Favorites and Trending interfaces.

Now the bad news: If you, like me, spent years suffering through the horrible nightmare that was IR-blasting and cable TV connectivity with Media Center, you will be delighted—and by “delighted” I of course mean “not delighted”—that this functionality is absolutely unchanged in the Xbox One. So where the rest of the console is absolutely future-leaning, this bit is a blast from the past. It requires a cable box and can’t directly control your TV signal. At least for now: Maybe a future update will enable IPTV functionality, which would be more usable.

This service will be US-only at launch and it’s not yet clear whether it requires an explicit partnership with your cable (or satellite) provider. Microsoft has partnered with the NFL to provide exclusive interactive TV experiences for football games which would likely be delivered via a Snap mode interface and/or live notifications.

Games

The Xbox One reveal event was mostly about Microsoft’s vision for the console, showing off the Xbox One hardware, and giving a peek at the integrated experiences. But there were a handful of game-related announcements too, with more to come for E3 next month.

First up was EA, which announced a slew of sports titles coming to the console, including Madden NFL 25, NBA Live 14, FIFA 14, and EA Sports UFC. Activision provided an amazing look at my personal favorite upcoming title, Call of Duty Ghosts. And Microsoft Studios showed off a new Forza racing title.

More important, perhaps, Microsoft is investing a full $1 billion to ensure that 15 exclusive games launch on the Xbox One in its first year alone, a differentiator that I’m sort of morally opposed to, but something I think we all need to accept is simply one of the ways in which video game makers compete.

(Microsoft also announced a Halo live-action TV series and while that isn’t technically a game, it does at least have a tenuous Xbox One connection: The show will be made available, somehow, through the new console.)

Pricing

Microsoft did not reveal pricing for the new console, and my guess is that its’ waiting for Sony to price the PlayStation 4 first. You may recall that I had previously reported there would be two pricing models for the console: a standalone version for $499 and a $299 version that requires a two-year Xbox LIVE Gold commitment at a cost of $15 per month. Since then, Microsoft has cancelled plans for the subsidized version and my sources tell me that there will be just one version of the console that costs $499.

Other things we don’t know

While the list of things we don’t know about the Xbox One could fill a small book, there are some items I’m particularly interested in. Key among them is the developer story: If Microsoft is smart, they will create a variant of Windows 8’s Windows Runtime (WinRT) APIs—perhaps calling it WinXRT, similar to Windows Phone’s WinPRT—and let enthusiast and individual developers create apps that run on the new console. That would be amazing, and would open up the console to a much wider audience. It would also be unprecedented, and I’m worried that the Xbox team’s closed-box mentality will get in the way of this. We’ll learn more at BUILD in late June.

There was absolutely no mention of updated Xbox media services or apps—Xbox Music and Xbox Video, primary—at the event. This is an area of key concern for me, and I’m hoping for better PC integration here as well. I do know that Microsoft will issue a major update to these services and the Windows 8/RT apps in June/July, so maybe we’ll learn more then.

Finally, while there were of course a few game mentions, we need to know a lot more in this department. E3 is the timeframe for that one.