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As a console gamer I don't like saying this, but there has never been any console that was a "cutting edge PC hardware powerhouse". I'm sure the moment the original Xbox debuted it was probably already outdated by PC standards. And it didn't matter anyway, everyone was still buying PS2 games. The Gamecube was also more powerful than the PS2 and yet still couldn't compete with it. Actually, the fact that many Xbox games were on PC actually became a point of criticism. Why not just HAVE a PC?
And no it did not carry Sega's flag. The Dreamcast had lots of arcade games, fighting games, JRPGs, and Japanese flavored games. The whole Xbox brand went HARD towards shooters, Western oriented games, and stuff that you could play on PC while Dreamcast actually had cool exclusives. The Dreamcast brought online to gaming but didn't make their console a SLAVE to it. So many original and creative games we got that Sega developed and published that we didn't get from Microsoft. They bought Rare and we got...what? The only good game I remember was Viva Pinata. How many creative, imaginative titles actually came from Microsoft? Just Halo games and shooters. The 360 lived and died on thirty party support. The entire vibe of the Dreamcast was ENTIRELY different than the Xbox and the Xbox 360. What about quirky fun stuff like VMU games? What happened to that? Nothing like that on Xbox consoles.
As far as Arcade goes, it was cool, but that sort of thing would have come to be one way or another whether it was Xbox doing it or Nintendo or Sony. All things entertainment eventually moved in a direction of being available digitally. If nothing else it would have been Valve pushing out those indie games on Steam and everyone else following suit.
OG Xbox pushed Dead or Alive 3 and 360, 4. They had Panzer Dragoon Orta, Sega GT, Jet Set Radio Future. They backed Japanese shit like Blinx, and True Fantasy Live Online. It had Ninja Gaiden Black. They later paid Mistwalker to make 2 Final Fantasy followups.
You are console warring about shit that happened 20 years ago, whining like a baby because the status quo of the industry is now heavily focused on centralized digital platforms with online connectivity.
Xbox Live brought the model we all take for granted to market, and the kicker is, you're forgetting that it wasn't even like that on PC at the time. Steam took lessons from Xbox Live.