Microsoft picks IBM for Xbox 2

Microsoft has signed up IBM to manufacture chips for the "future" generations of its Xbox console.

According to a statement offered by both companies, Microsoft has "licensed leading-edge processor technology from IBM for use in future Xbox products and services to be announced at a later date".

That's the same language used in the statement announcing Microsoft's deal with ATI to use the graphics specialist's GPUs in future Xbox systems. It is widely believed that that announcement referred to Xbox 2, so it's a good bet that the IBM announcement does too.

But which chips will IBM provide? The implication is that we're talking PowerPC processors. That seems unlikely given the current Xbox's foundation on x86 PC technology, but rumours have circulated of a compatibility break between the two generations of the console. If accurate, it's a bizarre move for Microsoft to make, particularly since backward compatibility surely helped Sony sell Playstation 2.

But x86 and PC technology may simply have been seen by Microsoft as an easy way into the console market. Having established a foothold, it might well now be looking to develop hardware more relevant to that sector rather than the general purpose computing arena.

ATI, meanwhile, already has a games console connection with IBM in the form of the Nintendo GameCube, which is based on a PowerPC 440 variant codenamed 'Gekko' and ATI graphics technology. Did ATI persuade Microsoft that this was the best route to take for Xbox 2?

But is IBM offering PowerPC technology? Some coverage of the deal, based on pre-release viewings of the press statement we reckon, suggests that the arrangement is more about manufacturing than CPU development. If so, that might favour AMD. Its Athlon 64 has been heralded by AMD fanboys as the most sensible choice for Xbox 2. IBM and AMD have a joint development programme working on future 65nm and 45nm process technologies, so there's a connection between the two companies. We expect AMD to choose IBM has a fab partner when 65nm comes on stream.

But the AMD-Xbox 2 connection is largely the result of speculation. Since Microsoft has already dropped Nvidia for ATI, the pundits suggest, won't it likewise drop Intel for the AMD? Today's announcement suggests that it has not only ditched Intel but the x86 platform too, which suggests AMD may not be getting a look-in after all.

Microsoft has licensed "processor technology" not 'process' technology, so it's fair to read it as a chip development deal rather than a chip manufacturing deal.

The new Xbox technologies will be "based on the latest in IBM's family of state-of-the-art processor", the statement says.

That suggests the 970 - aka Apple's G5 - IBM's 64-bit desktop chip. That 130nm chip already clocks to 2GHz, and IBM has already said it has begun sampling the 90nm version, which bodes well for the platform's ramp to 3GHz and beyond.