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While Intel and Nvidia power the current incarnation of the Microsoft Xbox, future versions may be radically different. With reports of Nintendo expecting to cut pricing on the Gamecube, and poor sales in Europe and Japan, this may force Microsoft to do the same...making the Xbox more of a loss-leader than they expected. Microsoft appears to be feeling about for alternative CPU and graphics suppliers to help lower manufacturing costs. Fechtor, Detwiler & Company released a report last month claiming AMD had secured the CPU rights for the next revision. ATI and VIA has also been rumored to be in the running for future Xbox versions.

What will be powering the next Xbox? The Inquirer has been mulling over the idea that Microsoft is working on designing their own processor and graphics chips for the Xbox2. This idea really isn't that far fetched. By producing their own processor and graphics chips Microsoft would have to outlay a bunch in R&D, but those costs could be recouped in the long term by lower production costs of the Xbox. These chips could also be used in other products used for their eHome strategy.

Today the Inquirer began piecing together some evidence pointing to designing graphics and processors in-house. Microsoft has been looking for a a DX9/10 microcode engine and has already bought some of SGI's patent portfolio. Also, add in the fact Microsoft has dabbled in graphics hardware before, building their own graphics chip isn't a pie in the sky idea. On the processor side, the Inquirer believes that Microsoft would want to use their Microsoft Intermediate Language for the Xbox2, but would also need backwards compatibility with the original Xbox. Hrmm...can you say code morphing? Microsoft may not need to develop their own processor...

Now look at the fact that Transmeta, which is steadily heading into deep financial waters has refused take-over bids . Or rather, it has refused unsolicited take-over bids. Its share price is bargain basement stuff. It's losing money hand over fist. It has a processor that is capable of running x86 code.

The Crusoe can also code morph. Transmeta could easily build a code morphing engine for MSIL - it has already demonstrated a Crusoe acting as an x86 and Java processor at the same time. It starts to make you wonder why two of the top executives at Transmeta left recently. It starts to make you wonder why they were refusing unsolicited take-over bids. So maybe Microsoft has already found the processor they want.

But the question would remain if the Crusoe is fast enough to power a game console. Microsoft would be hard pressed to produce their own processor and graphics chips to outclass an Intel/AMD and Nvidia/ATI configured Xbox2. A Microsoft combination may not make it into the next Xbox but an extra year or so may bring things to fruition...ya never know what the future holds.

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