IBM Scores Big in Gaming Console Market with Custom Processors

Strategic Insights -

IBM has emerged as a significant winner in the video game console market, providing custom microprocessors for all three of the major players: Microsoft's Xbox 360, Nintendo's Revolution, and Sony's PlayStation 2 successor. This collaboration marks a major shift in the gaming industry, as IBM's chips will be used in all three consoles for the first time ever. The IBM-designed chips, each unique and tailored to meet the specific needs of each console maker, are a testament to Big Blue's cutting-edge technology and expertise in the semiconductor industry.

Key Takeaways:

  • IBM will provide custom microprocessors for all three major gaming consoles: Microsoft's Xbox 360, Nintendo's Revolution, and Sony's PlayStation 2 successor.
  • Each chip is designed to meet the specific needs of its respective console maker, with a focus on performance, graphics, and user experience.
  • IBM has worked with Nintendo since the mid-1990s and has already provided chips for Nintendo's GameCube machines.
  • The new chips will be produced at IBM's East Fishkill, N.Y., factory, and by third-party suppliers overseas if needed.
  • IBM is expected to ship tens of millions of chips to the three console makers over the next four or five years, making it a significant growth area for Big Blue's microelectronics business.
  • The customized chips were a major selling point for IBM, with console makers looking for a way to differentiate their products and offer a unique gaming experience.
  • Each console maker has a slightly different objective with its machine, with Microsoft emphasizing Internet connectivity, Sony highlighting high-definition DVD technology, and Nintendo focusing on better graphics and user experience.

Statistics:

  • IBM will produce tens of millions of chips over the next four or five years.
  • 6,500 people work at IBM's Austin, Texas, facility, primarily in software, hardware, and semiconductor design.
  • The East Fishkill, N.Y., factory will produce the majority of the chips, with some production taking place overseas if needed.
  • 100% of new gaming consoles will feature IBM chips within 12 to 18 months.
  • The gaming console market is a promising new era for Big Blue's semiconductor business.

Sources:

  • Brian O'Rourke, senior analyst with technology research firm In-Stat/MDR
  • Lisa Su, vice president of technology alliances for IBM's chip business
  • Yoshihiro Maruyama, Microsoft Corp.'s Xbox project director
  • Peter Moore, vice president of worldwide sales and publishing for Xbox
  • ITSUO INOUYE / Associated Press