Microsoft bets on AMD chips to boost gaming console market share

Microsoft Corp will use an Advanced Micro Devices Inc processor in its next Xbox game console as it seeks to cut the cost of building machines and get developers to create more titles, people with knowledge of the matter said. Shares in AMD surged the most in almost two years.

The Xbox will use an AMD system-on-a-chip that combines powerful "Jaguar" central processing units with graphics chips, said one of the people, who sought anonymity because the plans aren't public. The shift to the so-called x86 format ubiquitous in modern personal computers means Microsoft will drop the Power PC technology designed by International Business Machines Corp and game discs made for the current Xbox 360 won't be compatible.

The switch is a boon for AMD, which is also providing chips for Sony Corp's coming PlayStation 4 as it seeks a larger slice of the $67 billion global video-game market to help lessen its reliance on the shrinking PC industry. Microsoft also stands to benefit because game developers, who have moved toward making games for PCs and mobile devices, will find it easier to deliver those titles for the next Xbox.

"We'll probably see many more titles because the console makers are saying the publishers are back in the driver's seat," said Richard Doherty, president of technology consulting firm Envisioneering Group. Developers won't have to reinvent various features, such as "smoke, shading and reflections for each machine and can essentially create once and port once and be done."

Game publishers have complained that current consoles, each with a different architecture, come with a steep learning curve that drives up development costs, according to Doherty. Those companies will save money with the new chips, he said.

Microsoft, which had considered unveiling the Xbox 360's successor this month, will do it later, three people said. The company is considering revealing plans for the new Xbox at the industry's E3 expo in June or at a separate event in May or June, they said. Microsoft plans a May 21 event, The Verge reported.

The company hasn't released the next Xbox's specifications, including whether it will have an optical drive or details of online-game features and entertainment services.

John Taylor, an AMD spokesman, declined to comment, as did David Dennis, a Microsoft spokesman.

Microsoft, based in Redmond, Washington, decided against an April event because it saw little competitive pressure from Sony, which plans to release the PlayStation 4 in time for the Christmas holidays, said sources.

At Sony's February unveiling of the PlayStation 4, the Tokyo-based company demonstrated the controller and game play running on prototype hardware, without showing the machine. Critics including Amir Anvarzadeh, a Singapore-based manager for Asia equity sales at BGC Partners Inc, panned the lack of any "revolutionary" advances and the PS4's emphasis on social-gaming features.

Nintendo Co's Wii U, another competitor, has been selling below the company's initial forecasts since November. In January, the company said it expected to sell 4 million units in the year ending March 31, down from a previous outlook for 5.5 million.

For AMD, providing chips for game consoles is part of Chief Executive Officer Rory Read's plan to lessen the company's dependence on the declining personal computer market. Read is aiming to get more than 20 percent of AMD's revenue from areas other than PCs by the fourth quarter.

(China Daily 04/15/2013 page17)