The big Xbox 2 gamble

Battle of ‘you go first’ consumes ATI, nVidia.

Posted by Staff
The big Xbox 2 gamble
Speculation is hotting up around all next next-generation consoles, not least the successor to Microsoft’s Xbox and what its guts will be like. We recently brought you news that ATI, graphics card specialist and supplier of the GameCube’s Flipper chipset, might be looking to supply any future Xbox model. However, a more interesting picture is emerging.

We know that nVidia suffered a massive spat with Microsoft, a firm not renowned for its business integrity, that ended up with both companies sitting at the arbitration table following disagreements over pricing and order levels of the GeForce 2.5 chip that powers the Xbox’s graphical output.

This followed a $200 million advance from Microsoft that saw a 200-strong team work to get the chip ready in time for launch. Even this wasn’t enough to meet the initial deadline for delivery, but that’s another well told story.

Yesterday nVidia CEO Jen-Hsun Huang made some comments that cast doubt upon the firm’s commitment to even pitch for future Xbox business. Having hinted that Microsoft need match Sony’s research and development expenditure, a revelation in itself, Huang said, “We would be delighted to work with Microsoft on the next Xbox, but we are a company with many opportunities.” He also confirmed that nVidia had spoken to Sony Computer Entertainment at some point, about future consoles.

“After the way the first Xbox went, I would view nVidia's involvement with the next Xbox as a negative,'' said Joe Osha, an analyst at Merrill Lynch.

This outright apathy is simply a way of laying down the gauntlet to other manufacturers, not least ATI, who recently hinted that it may be interested in working with Microsoft. Having forged a steady, profitable relationship with Nintendo, ATI will have to decide whether the Xbox lions’ den is one it dares to enter.


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