Sony, who had crushed Microsoft's original Xbox and Nintendo's Gamecube with the Playstation 2, was about to release the PS3.
Nintendo, was getting ready for a "revolution" with motion control, and was about to release the Wii, which wasn't competing with Sony or Microsoft on a graphical or controller level.
With Microsoft already having a year ahead of both systems, it was on good footing, but aside from Halo which wasn't coming out until 2007, they didn't have a killer app or known franchise to rest on to prevail them through this tidal wave; that is until Gears of War came out.
The first Gears of War is exactly what the Xbox 360 needed to conquer. It was a great controlling game, with an excellent and easy-to-use cover system, that had violence galore coupled with excellent graphics that showcased the power of the 360. Plus, it had great multiplayer, satisfying shooter fans with longevity after the single player campaign was over. It was the perfect storm all wrapped in one game.