Intel Uses Pricing Clout To Land X-Box Deal
(03/18/00, 3:37 a.m. ET) By Jack Robertson,
Electronic Buyers' News
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." |
