IBM's Dominance in Next-Generation Game Consoles through Custom Microprocessors

Strategic Insights -

IBM's microprocessors play a critical role in the functionality and cost of the Xbox 360 Premium video-game console, indicating a significant advantage in the gaming market. The company's custom PowerPC microprocessor, clocked at 3.2GHz, accounts for 20.2 percent of the total Bill-of-Materials (BOM) cost, totaling an estimated US$106 per console. Additionally, IBM's chip and other integrated circuits in the Xbox 360 total an estimated US$340 per console, making it a key component in the console's overall design.

Key Takeaways:

  • IBM's custom PowerPC microprocessor powers the Xbox 360 Premium console, clocked at 3.2GHz and costing US$106, accounting for 20.2 percent of the total BOM cost.
  • The microprocessor is a triple-core design, co-manufactured by IBM, and is a key factor driving the cost and functionality of the console.
  • Other key semiconductors in the Xbox 360 include the Graphics Processing Unit (GPU), memory, and Southbridge I/O controller, totaling an estimated US$340 per console.
  • The total BOM cost for the Xbox 360 Premium reaches US$525, well above the retail price of US$399.
  • IBM's dominance in next-generation game consoles extends beyond the Xbox 360, with its chips being used in two other upcoming game consoles.
  • The iSuppli Teardown Analysis Service estimates that the custom microprocessor accounts for a significant portion of the console's overall cost and functionality.

Statistics:

  • The US$106 cost of the custom microprocessor accounts for 20.2 percent of the total BOM cost for the Xbox 360 Premium.
  • The total BOM cost for the Xbox 360 Premium reaches US$525.
  • The last-generation Xbox 360 GPU costs an estimated US$141, including embedded DRAM from NEC.
  • The total cost of semiconductors in the Xbox 360 is estimated at US$340 per console.

Sources:

  • iSuppli Corp.'s Teardown Analysis Service
  • iSuppli Corporation
  • Jonathan Cassell, Editorial Director and Manager, Public Relations of iSuppli Corporation