Microsoft Replaces NVIDIA with ATI for Next Xbox
After a long, tumultuous relationship with NVIDIA, Microsoft has switched directions and penned an agreement with key NVIDIA competitor ATI Technologies. ATI is now set to become one of the key vendors to supply Microsoft's gaming division. The two firms have commenced a technology development agreement to foster in a new graphical engine that will power future Xbox products and services.
According to the company, Microsoft awarded the contract on the basis that its technical vision was close bedfellows with ATI's own product roadmap. ATI, which provides the graphics processor for Nintendo GameCube, seems to be in complete agreement with the software giant's appraisal of its technologies.
Citing his company's common desire for "cutting edge innovation," ATI Chief Executive Officer K. Y. Ho commented, "Our success working with Microsoft in the past gives us great confidence as we move forward, and our broad experience and wealth of engineering resources will ensure that we deliver."
"This agreement cements ATI's position as the prime graphics supplier for the future of the games industry," said Ho.
For its part, rival NVIDIA maintains that is not wearing cement shoes. Company spokesperson Derek Perez downplayed today’s announcement to the level of any other OEM licensing agreement.
However, its previous agreement with Microsoft compromised between 15 to 20 percent of NVIDIA's overall sales.
"We looked at the next-generation Xbox product as we would other OEM opportunities, i.e., the economics have to make sense for both parties. In this case, we were not able to reach an agreement," Perez told BetaNews.
Perez refused to comment any further as to how this agreement affects future relations or the business prospects of either party.
Beyond the tight lips, NVIDIA and Microsoft share a torrid past. Slumping sales, inventory adjustments and changes to Xbox hardware left NVIDIA with slews of useless chips. This excess inventory triggered a recently resolved contract arbitration in which both companies claimed legal victory.
Despite parting ways, Microsoft and NVIDIA both remain industry leaders. With its new partner, Microsoft marches on, struggling to find high ground in the gaming console market.