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Consumer electronics industry

Next-Generation Consoles: IBM Takes the Lead

Strategic Insights

— 1 min read

At the upcoming E3 trade show, the big question in the video games industry will be which company will produce the best next-generation console. Microsoft's Xbox 360, Sony's PlayStation 3, and Nintendo's Revolution will all utilize IBM processors, with the Xbox 360 set to launch in the fourth quarter. This marks a significant opportunity for IBM, as the company's "Cell" processor, developed in a joint venture with Sony and Toshiba, boasts nine "brains" and has been chosen for the PlayStation 3. Microsoft, meanwhile, has opted for IBM's Power PC architecture for the Xbox 360, but its multi-core processor will still offer impressive performance.

Key Takeaways:

  • IBM's "Cell" processor, featuring nine "brains," will be at the heart of the PlayStation 3, while the Xbox 360 will utilize IBM's Power PC architecture.
  • Microsoft has chosen a multi-core processor for the Xbox 360, which, although not matching Sony's "Cell" processor, will still offer high performance.
  • IBM's dominance in the next-generation console market could leave Intel and AMD, which currently dominate PC gaming, shut out of the opportunity.
  • Sony's focus on perfecting its technology risks delaying its launch, potentially into 2006.
  • Microsoft faces the risk of releasing hardware that may seem outdated soon after launch, potentially disappointing users.
  • The next-generation consoles will be focused on high-definition entertainment, but their appeal may be limited to those with HDTV screens, as seven out of ten people currently do not have them.
  • A significant portion of the market may not be able to take full advantage of the high-definition capabilities of the next-generation consoles.
  • IBM's joint venture with Sony and Toshiba has resulted in the development of a revolutionary processor.
  • The console makers are making significant sacrifices in order to break even, with their primary hope residing in the sales of games software and services.

Statistics:

  • The next-generation consoles will utilize IBM processors.
  • IBM's "Cell" processor features nine "brains."
  • The Xbox 360 will utilize IBM's Power PC architecture.
  • The Xbox 360 will be released in the fourth quarter.
  • Seven out of ten people currently do not have HDTV screens.
  • Half of the population could have HDTV screens by the end of the decade.
  • 50% of people could have HDTV by 2010.

Sources:

  • J Allard, corporate vice-president for Microsoft's Xbox
  • Jay Horwitz, senior analyst at Jupiter Research
  • Richard Doherty, consumer technology analyst with Envisioneering Group

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