Intel Uses Pricing Clout To Land X-Box Deal
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Intel Uses Pricing Clout To Land X-Box Deal
In what industry observers are calling a
late-round TKO, Intel this week beat out
Advanced Micro Devices as the supplier for
Microsoft's upcoming X-Box game console.
While there is disagreement as to whether Intel won
based on price or performance, industry sources said
the Santa Clara, Calif., company cut its offer to the
bone to block rival AMD from using the X-Box as a
stepping stone to the broader consumer-electronics
market.
AMD's Athlon had its slot in the X-Box locked up until
Microsoft made a last-minute switch to Intel the day
before chairman Bill Gates unveiled the new machines,
said Richard Doherty, an analyst at The Envisioneering
Group, in Seaford, N.Y. Game developers had even
been working with AMD to develop software to run on
the Athlon processor in preparation for an X-Box
launch later this year, he said.
However, a delay affecting Microsoft's operating
system software pushed the box into 2001, Doherty
claimed, giving Intel the opportunity to force its way in
with steeply discounted Pentium III processors and an
offer of free support services.
A spokeswoman for Sunnyvale, Calif.-based AMD
told Electronic Buyers' News that the chip maker will
support Microsoft and the X-Box fully, but not at the
expense of profitability. "[AMD is] not going to sell its
Athlon processors for the Microsoft X-Box at
giveaway prices," she said.
Interviewed this week at a Semiconductor Industry
Association board of directors meeting in Washington,
D.C., Intel president and chief executive Craig Barrett
scoffed at claims that Intel low-balled AMD. "Intel
offered the highest-performance solution with the
highest level of support" to win the X-Box design-in,
Barrett said.
A Microsoft spokesman refused to comment on the
factors that led to the company's selection of Intel.
Intel "was forced to bid whatever it took to get into the
X-Box to dislodge AMD and use the Microsoft game
player as a centerpiece for its own consumer-market
penetration," said Bert McComas, an analyst at
InQuest, Gilbert, Ariz. Intel has been "remarkably
unsuccessful" in getting its processors designed into
consumer products such as game players, set-top
boxes, and handheld devices, McComas said. Intel's
worst-case scenario would have been to see AMD use
the X-Box to penetrate the consumer-electronics
segment, he said.
Wintel Goes Consumer
Intel and Microsoft now will push the X-Box as a $300
living-room appliance, combining games, DVD video
and audio, and an Internet browser, according to
analysts. Doherty expects the reunited Wintel combo to
use the same electronics in an HDTV set-top box and
for vehicular entertainment and Internet devices.
Microsoft already sells the Internet-enabled WebTV
set-top box, which is made by Sony and uses a MIPS
processor designed by QED. X-Box has the potential
to become Microsoft's biggest single consumer-OEM
product, observers said. It's likely that box assembly
will be outsourced, according to a spokesman for the
Redmond, Wash., company.
It's also likely that many X-Box features will find their
way into next-generation consumer PCs, analysts said.
For instance, the console will use an Nvidia graphics
engine and a 200-MHz, 128-bit bus to connect directly
to 64 Mbytes of double-data-rate (DDR) SDRAM.
This eliminates the core-logic chip set, AGP port, and
separate dedicated graphics memory.
With no graphics frame buffer, the Nvidia chip
interfaces to main memory but with data access as high
as 6.2 Gbytes/s.
"That is so fast that graphics can access main memory
to run images at hundreds of megapixels/s speed-and
still there is enough memory capacity for the processor,"
McComas said.
For Intel, the design win further blurs the already fuzzy
line between computing and home entertainment. But
given that it's able to sell essentially the same processor
architecture in both markets, observers don't foresee
any significant changes to the company's road map or
supply chain strategy.
The company will have the capacity needed to meet
demand from both Micro- soft and its traditional PC
customers, an Intel spokesman said. The X-Box will
use an 800- or 900-MHz Pentium III when it's rolled
out next year, McComas said, which at that time would
amount to easily manufactured trailing-edge clock
speeds. Even if the game console hits shipment targets
of 12 million to 16 million units a year, that's still a
fraction of the 100 million processors Intel manufactures
annually for the PC and server markets, he said.
SDRAM Edges Into Game Market
Microsoft's decision to use DDR SDRAM gives a
boost to the emerging memory interface, and is a blow
to proponents of the Direct Rambus DRAM
architecture. Following word that the Sony PlayStation
II-just introduced in Japan-will use Direct RDRAM
chips, Rambus advocates predicted that the memory
interface will dominate gaming and consumer markets.
However, in addition to Microsoft, Nintendo has opted
to use DDR SDRAM in its next-generation Dolphin
game player. The console will use a logic chip that
embeds an SDRAM-based virtual channel memory
core, a device that will be made by NEC.
The X-Box's use of DDR memory will have an
"influential impact" on consumer-product OEMs' choice
of DRAM, said Bob Fusco, DRAM marketing
manager at Hitachi Semiconductor, in San Jose, Calif.
"X-Box won't come on the market until mid-2001, so it
won't have any effect on ramping up DDR production
this year," he said. "But it will cause more OEMs to
consider DDR as their memory choice."
The X-Box also sees Intel supporting DDR SDRAM
for a mainstream product at a time when the company
has relegated use of the interface to the low-volume
server segment. Sources even said that Intel is
considering using the same point-to-point
graphics-controller architecture found in the X-Box to
support DDR SDRAM in an upcoming consumer PC
that will run the game console's software.
Some analysts questioned whether the X-Box
architecture might have retained a remnant of AMD's
early design influence given that the device is expected
to use a 200-MHz processor bus line-the same bus
frequency used by the Athlon chip. To date, Intel's
highest processor bus runs at 133 MHz.
Intel will use a double-pumped version of its 100-MHz
bus, a technique under development for use in its
upcoming high-performance processors, according to
one source.
Without discussing details, Barrett said that the X-Box
has "the highest performance specifications of any
electronic game player, and Intel will meet all of these
specs." |
