Microsoft Turns to IBM for Next-Gen Xbox - 04 Nov 2003

   In a surprise announcement yesterday, Microsoft revealed that the company has chosen IBM, not Intel, as the microprocessor supplier for its next-generation Xbox game console, which will likely be unveiled at the Consumer Electronics Show (CES) 2004 in January. The deal is the second one for IBM. Sony also recently chose IBM as the microprocessor supplier for its next-generation PlayStation system. Most intriguing, however, is the announcement's vagueness: Neither company will say whether the chips involved are x86-compatible, like those in the current Xbox, or whether IBM will supply chips based on Power PC technology, an incompatible but technically sound alternative.
   "Microsoft is already developing the software and services that will drive the Digital Decade," said Robbie Bach, senior vice president for Microsoft's Home & Entertainment Division. "By combining our vision, software experience, and [resource and development] resources with IBM's computer and semiconductor technologies, we plan to deliver unprecedented and unparalleled entertainment experiences to consumers while creating new engines of growth for the technology and entertainment industries."
   IBM Fellow and Chief Technologist Bernie Meyerson says the new Xbox technologies will be based on IBM's most recent state-of-the-art processors, leading some people to think that a Power PC chipset is in the works for the next Xbox. If so, backward compatibility with the millions of Xbox software titles currently in circulation is in doubt. Sony rode the strength of backward compatibility with its PlayStation 2 system and isn't currently the market leader. What Microsoft would gain by cutting off early purchasers from their existing software libraries is unclear.
   In related news, video game competitor Nintendo announced that its recent GameCube price cut has had the desired effect. After dropping the price of its console from $149 to just $99 last month, Nintendo saw GameCube sales rise dramatically, outselling the Xbox for the month. Nintendo sold 37 percent of all video game consoles in October in the United States, compared with just 21 percent for Xbox and 42 percent for PlayStation 2. GameCube sales have risen month over month since August, whereas Xbox sales have fallen somewhat. PlayStation sales have fallen quite dramatically in the same time period, but the system still maintains a sales lead.