[New]Microsoft & Nvidia Settle There Dispute on chips for XBX 2 [New]

[Hitman101]

From Iwon

Thursday February 6, 6:30 AM EST

(recasts, adds background)

SANTA CLARA, Calif., Feb 6 (Reuters) - Graphics microchip maker Nvidia Corp. (NVDA) said on Thursday it has settled a dispute with Microsoft Corp. (MSFT) over the pricing of graphics, audio and networking chips for the Xbox video game system.

Nvidia, whose highest-profile customer is Microsoft, had previously said it could be forced to produce the chips at a loss if it lost the arbitration.

In addition to the agreement, which ends the arbitration, Nvidia said the two companies would work together on "future cost reductions" for the Xbox. Further details were not disclosed, but Nvidia said it provide more information during a conference call on Feb. 13.

Nvidia and Microsoft, the maker of the Xbox system, had been in arbitration over the prices Microsoft pays for the graphics chips it buys for the Xbox, and the volume in which those chips are produced.

Microsoft has been the highest-profile customer of Nvidia, whose fortunes have been closely linked in past to the Xbox's performance, though its Xbox chips have been a declining part of the company's overall revenue.

Nvidia's, revenue from Xbox products fell $40 million in its fiscal third quarter from the prior quarter, and the company in November said it expected fourth-quarter Xbox sales would be flat over third-quarter sales.

Looks like Nvidia will be producing chips for the Xbox 2 after all .

[Knight]

They still have to beat ATI for XBox2, but if they can make a better chip then ATI then they will be in XBox2.

[SPARTAN VI]

I heard about this on TechTV a few minutes ago. Pretty cool, when they were talking about it, they had Halo playing in the back.

[GokuX]

That'd be cool if they fought it out to become the sole chip maker for the Xbox 2. You'd be seeing a huge leap in the performance to price ratio. Competition is a good thing.

[carlbme]

That actually just means that they have settled the litigation concerning the price of the current batch of chips.

As of yet it still seems as if it is undecided as far as the maker of the chips.

[wilcon]

I think it's pretty clear that Nvidia will get the contract for Xbox 2, just think about it, both Nvidia and ATI have there exclusive tech (like truform for ATI) now if Microsoft went with ATI all that exclusive technology would be lost and breaking all the previous games, so if they dont go with Nvidia there wont be backwards compatiblity with the Xbox 1 titles. If Microsoft went with ATI they would have to pay royalties to Nvidia to use their technology and then implement the technology into the chipset that ATI provides for microsoft, so in theory Microsoft has to go with Nvidia or loose lots of money (especially considering that nvidia designed the whole chipset in Xbox). This is all true unless Nvidia has given Microsoft (under the contract now) the rights to use all their technology they have in the Xbox now for the Xbox 2 which is unlikely.

[Evil_Dr_Beefy]

Mmm..that's great news..But remember nothing is set in stone. Who knows ATI might still get it......Microsoft had better get the best chips possible..The playstation 3 sounds like a monster machine.

[Hitman101]

PS3 Monster machine !!!! Plz is just Hype. Remember it just SOUNDS like a monster machine but will it be one???? Remember mircrosoft is the defintion of technology they wont slip up on Xbox 2.

[wilcon]

This Cell computer on the PS3 is like hooking up a bunch a 300mhz computers together and the Xbox 2 will be one 5ghz computer... hmmm i wonder which one will be better? ... Sony is just one big hype machine, remember when they told you the PS2 was suppose to be good?

[Brevity]

This is all silly, it would surve XB right if N put out a flawed chip jus to spite them.

[Evil_Dr_Beefy]

I don't know about the hype thing,Hitman101.......That cell technology that Sony is bragging about sound exciting. but i wonder if it's better on paper than in theory. Microsoft seems to be playing it safe, going the way of a souped up Pc. At the sametime..i have seen that demo for invidia new cards and the technology is jaw dropping. I think that only time will tell what both companies have in store for the videogame hardcore elite.

[Xbox Owner]

Good to see them work it out. Hopefully they can come out with a badass console.