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cja · May 13, 2005

Nvidia ends shipments of chips for Xbox
By Chris Nuttall FT.com, 00:04 BST May 13, 2005

Nvidia, the graphics chipmaker, said on Thursday it was ending shipments of chips for Microsoft's Xbox game console in the current quarter as what was once one of its biggest customers moved on to its next-generation machine.

Microsoft is expected to release the Xbox 360 in November, featuring a graphics chip from rival ATI. Microsoft had informed Nvidia it would not take any more product after Nvidia's second quarter, ending August 1.

The news was a clear indication that Microsoft was cutting off production of the old Xbox and of the imminent release of its successor. In contrast, Sony is still selling its original PlayStation console several years after the launch of the PS2.

Nvidia's inclusion in the original Xbox, launched in 2001, had been a major boost for the Silicon Valley company, but other areas of its business have since grown and Microsoft is no longer one of its top-ten customers.

An Nvidia chip will feature in the PlayStation 3, expected next year, and the company said revenues from that would begin to flow in after the technology licensing started in the third quarter.

The graphics company reported record sales in its first quarter ending May 1 of $583.8m, up 24 per cent on a year earlier. Net profits were $64.4m or 36 cents per diluted share, compared to $21.3m or 12 cents a year earlier.

Analysts had expected sales of $579.7m and earnings of 28 cents, according to Reuters Estimates.

Nvidia said there had been 20 per cent growth in chip sales for high-end PCs and its next-generation GPU (graphics processing unit) was set to be unveiled at the E3 computer games trade show next week.

The company said it had been forced to write off handheld inventory after Motorola cut its orders for chips for 3G phones as demand failed to meet expectations.

Nvidia expected the handheld segment to return to growth in the second half. It was bullish on the current quarter, usually the seasonally slowest with sales down 5 to 10 per cent on the previous quarter. Instead, Nvidia forecast sales would be flat to slightly up.

Nvidia shares rose nearly 9 per cent in after-hours trading to $24.75 on the news.

http://mwprices.ft.com/custom/ft-co...t&guid={5779A512-3DD8-4E0F-A1A5-1E81954E91B4}

Mrbob · May 13, 2005

Uh oh.

What does this mean for backwards compatibility?

Doomed?

sonycowboy · May 13, 2005

No more Xbox's?? I wonder how many chips Microsoft has left?

Legal Step · May 13, 2005

This is the new business model. Abadon all that went before ye'. J. Allard gets more and more like Moby every day.

MassiveAttack · May 13, 2005

Mrbob said:
Uh oh.

What does this mean for backwards compatibility?

Doomed?

No BC unless it is entirely done through emulation. Also means shipments of the current XBOX will likely end this year.

bitwise · May 13, 2005

sonycowboy said:
No more Xbox's?? I wonder how many chips Microsoft has left?

therein lies the question.

DarienA · May 13, 2005

Well this doesn't mean software support'll stop anytime soon..right?

Gek54 · May 13, 2005

DarienA said:
Well this doesn't mean software support'll stop anytime soon..right?

:lol

Baron · May 13, 2005

DarienA said:
Well this doesn't mean software support'll stop anytime soon..right?

No, not at all - remember the glut of games released for the Dreamcast after Sega ceased production?

GhaleonEB · May 13, 2005

Baron said:
No, not at all - remember the glut of games released for the Dreamcast after Sega ceased production?

Hell, games are still coming out for it. 2007 here we come!

sonycowboy · May 13, 2005

DarienA said:
Well this doesn't mean software support'll stop anytime soon..right?

I'll pass this one off to Mr. Pachter:

GameSpot: Your guess: Average selling price (ASP) on Xbox 1 software will drop precipitously on the 360's launch or stay as is?

Pachter: That depends completely on backward compatibility and maintaining production of the current Xbox. If neither of these occur, ASPs will drop a lot. If both occur, ASPs probably drop gradually over a couple of years.

No BC + No HW = Software drops like a stone.

Of course, maybe there will be BC, but if it's only for the upgraded version, that will mute it. You could probably buy the Xbox360 + Xbox for the price of the Xbox 360 DE (of course, the DE would have ALOT more than BC)

Izzy · May 13, 2005

Suikoguy · May 13, 2005

Wow that was quick

How much more interesting can today get?

MassiveAttack · May 13, 2005

Izzy said:

Uh oh. Spong owns GAF: News at 11.

GhaleonEB · May 13, 2005

Suikoguy said:
Wow that was quick

How much more interesting can today get?

Ask that again in 90 minutes.

JoshuaJSlone · May 13, 2005

sonycowboy said:
No more Xbox's?? I wonder how many chips Microsoft has left?

Well, it says they'll still be getting them through July... does anyone know what monthly production has been lately?

Just to get a vague idea, if Microsoft had sold ~20 million machines after having been in production a bit over 3.5 years, that would average out to something like half a milliion per month in the long view.

Suikoguy · May 13, 2005

MassiveAttack said:
Uh oh. Spong owns GAF: News at 11.

hehe, I was gonna mention that but the smile link was much more subtle

Looks like BlimBlim's source for that one sucked

sonycowboy · May 13, 2005

JoshuaJSlone said:
Well, it says they'll still be getting them through July... does anyone know what monthly production has been lately?

Just to get a vague idea, if Microsoft had sold ~20 million machines after having been in production a bit over 3.5 years, that would average out to something like half a milliion per month in the long view.

1) It's been closer to 4 years since they've been supplying them to Microsoft as they have to stock up on product before the launch.

2) It's not even close to being linear during the year.

3) There's been shortages for months, so perhaps production has been winding down?

Of course, maybe this is all a red herring and Microsoft bought another 10M units and will keep selling the system for 2 more years (which is what the definitely should do - see the analysts roundtable thread I posted here )

heidern · May 13, 2005

Nvidia it would not take any more product after Nvidia's second quarter, ending August 1.

A Nvidia chip will feature in the ps3, expected next year, revenues from that would begin to flow in after the technology licensing started in the third quarter.

So is the conspiracy theory that Nvidia are simply poking MS in the eye because they can with immediate effect benefit from ps3 revenue accurate at all?

JoshuaJSlone · May 13, 2005

sonycowboy said:
1) It's been closer to 4 years since they've been supplying them to Microsoft as they have to stock up on product before the launch.

Yeah, probably should've rounded to 4 rather than 3.5.

3) There's been shortages for months, so perhaps production has been winding down?

A lot of that is due to increased demand, though. Other than December, for the last year it's pretty much been outdoing what it did before in the US.

Of course, maybe this is all a red herring and Microsoft bought another 10M units and will keep selling the system for 2 more years (which is what the definitely should do - see the analysts roundtable thread I posted here )

Yeah, I was wondering the same. I guess there are too many unknowns for us to venture a decent guess on this right now.

JoshuaJSlone · May 13, 2005

heidern said:
So is the conspiracy theory that Nvidia are simply poking MS in the eye because they can with immediate effect benefit from ps3 revenue accurate at all?

The article makes it sound like it was Microsoft's choice:

Microsoft had informed Nvidia it would not take any more product after Nvidia's second quarter, ending August 1.

Odnetnin · May 13, 2005

GAMECUBE 2nD worldwide.

You heard it here first. MS in the 3rd place.

Suikoguy · May 13, 2005

Where on earth did you find that picture :lol

byproduct · May 13, 2005

Perhaps MS' strategy is that once their stockpile of Nvidia chips has run out you'll be able to get a backwards compatible X360 with HD for the same price that they would have been able to reduce Xbox to - X360 is designed to be cheaper for them to produce, right?

I just can't accept they'd kill the Xbox format without some way to keep playing the games.

seanoff · May 13, 2005

Ballsy move by MS.

not sure that its the best thing they've ever done, but we'll see i suppose. Given that Xbox is bleeding money stopping it is probably the best financial decision. However the publishers probably aren't overjoyed at this news and MS might be missing out on those late comers to the cycle that Sony will harvest.

mmmmmmmm

MassiveAttack · May 13, 2005

monkeyrun · May 13, 2005

I think it' a known fact there'll be no BC once they decided to go with PPC chip.

there's really really really tiny chance they could pull off an emulation like that

MassiveAttack · May 13, 2005

Agreed. With the constant leaks regarding HW and SW, backward compatibility would have been confirmed one way or the other. I think it's quite clear where this is going.

Fatghost · May 13, 2005

I agree. No news is bad news.

But shutting down the Xbox and not having a BC solution for Xbox 360 is not going to help MS transition the Xbox fan base to 360.

Mrbob · May 13, 2005

Fatghost28 said:
I agree. No news is bad news.

But shutting down the Xbox and not having a BC solution for Xbox 360 is not going to help MS transition the Xbox fan base to 360.

They'll also lose sales.

MS isn't in the same position as Sony with 80+ million consoles sold. They fail to realize that offering BC could also strengthen their Xbox brand, since it is only at 20 million right now. It would let consumers try out back catalogue of previous games in series and next gen in one set.

Rhindle · May 13, 2005

Microsoft and Nvidia and playing a game of chicken right now. It's in both their best interests to throw in an Nvidia chipset for cheap and be able to provide backward compatibility. It's just a matter of who caves first on pricing. If it happens, it won't happen until the very last minute before they have to lock the system design.

Deku Tree · May 13, 2005

Rhindle said:
Microsoft and Nvidia and playing a game of chicken right now. It's in both their best interests to throw in an Nvidia chipset for cheap and be able to provide backward compatibility. It's just a matter of who caves first on pricing. If it happens, it won't happen until the very last minute before they have to lock the system design.

If they're shipping this thing in October/November, wouldn't they have to "lock in the system design" pretty soon?

Fatghost · May 13, 2005

Deku Tree said:
If they're shipping this thing in October/November, wouldn't they have to "lock in the system design" pretty soon?

Yeah, they'd have to pretty much start mass producing units soon to just meet launch demand.

sol5377 · May 13, 2005

fyi, Microsoft's official line is that it will support Xbox until the end of '06. I assume that means shipments.

EclipseGST · May 13, 2005

Part of me wishes they dropped nvidia because they can just sale xbox 360 with BC and they know they can do it....plz MS...don't let me down!

*STUPID PD0...YOU MADE ME LIMP

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