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Microsoft picks Intel's chip
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March 10, 2000: 4:47 p.m. ET
Microsoft's new game consoles to be powered by Intel's Pentium technology
By Staff Writer Richard Richtmyer
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NEW YORK (CNNfn) - Intel on Friday said that Microsoft will use its technology for the new gaming console, the X-Box, which the software leader unveiled at the Game Developers Conference in San Jose, Calif.
The microprocessor giant said that although an actual chip for the new X-Box has yet to be specified, Microsoft (MSFT: Research, Estimates) will build the new consoles around Intel's Pentium III processor technology.
"We have reached an agreement that the device will be based on Intel's technology," Intel spokesman Bill Calder told CNNfn.com on Friday. "It will be based on our cutting edge, high-performance Pentium technology, which has some cool features that give it great 3D effects and a very realistic gaming experience as it already does for the PC."
Calder could provide no further details about the specifications for the X-Box processor, but on Microsoft's Web site for its new gaming consoles the company said it will use an x86 architecture - the current design standard for most of the world's Windows-based PCs - and run at 600 megahertz.
The new X-Box, which will also be built using graphics chips supplied by nVidia (NVDA: Research, Estimates), is Microsoft's first real push into the $20 billion-a-year worldwide video game market.
And by teaming with Microsoft on the X-Box, Intel also is throwing its hat into that market, according to Jim Feldhan, president of Semico Research in Phoenix.
"It's a design win that puts them outside the PC arena and captures another high-volume application," Feldhan said.
Over the past two years, Intel, which historically has focused its business on the PC marketplace, has been diversifying in order to keep up with the changing direction of the electronics industry. The company has been locking in on the market for products such as communications devices and "information appliances," which are designed for specific functions such as Internet access, Feldhan said.
But Intel's technology so far has not played a big role in the burgeoning market for gaming microprocessors, which Semico Research currently forecasts to be roughly $1.2 billion in 2001, which is when Microsoft expects to begin shipping the new gaming units.
"In the past, the games have been non-Intel architectures," Feldhan said. "This is just another piece of the puzzle that allows them to be able to start playing into that marketplace."
Friday's news put to rest speculation that Microsoft would use chips from Intel's competitor, Advanced Micro Devices (AMD: Research, Estimates), for the brains behind the X-Box consoles.
Intel shares ended Friday's session 1-13/16 higher at 120-3/16. Meanwhile, AMD slid 5-1/8 to 53. 
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X-Box Web site
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