Related articles

• The GameCube is cute and small. No question. The Xbox is large, very large. Microsoft even had to reduce the size of the controller for the Japanese market. Nintendo's GameCube, by contrast, will fit in a child's backpack, which, by the way, is the idea. Even the disks for the GameCube are small, with Nintendo sporting a 3" mini disk (the better to foil pirates?), while the PS2 and Xbox are using standard-sized and standard-formatted DVD drives. To a certain extent, this is being reflected in the MSRP of the consoles, with the GameCube selling for US$199.99 and the Xbox and PS2 for US$299.99. It is unknown how much Microsoft is losing on each Xbox, but it is suspected that they are losing at least US$100 per box, as well as spending US$500 million on marketing. Again, we have the Gillette model of doing business. Give away the handles, make up an arm and a leg on blades, we mean, um, games. This is now a three horse race with the GameCube, cheapest of the lot, set to appeal to the pre-teen set with Nintendo's strong franchise in Pokemon. The PS2 somewhat straddles the line between being a straight gaming console and maintaining some PC aspirations. (In Japan, Sony has made a Linux package for it.) With Xbox, Microsoft effectively erases the distinction between PC and Console by selling a PC that operates better than any console, or PC, for that matter, and is only lacking a keyboard. What are Microsoft's plans for the Xbox? Microsoft won't say, which has only led to further speculation. Right now we may understand the Xbox as a superb hardware console that has yet to show its stuff in our living room. But it will starting this month, as it takes on the incumbent, Sony's Playstation 2, which has a loyal following and excellent software, but also has certain limitations, the largest being the lack of an integral hard disk. What about the GameCube? We see it aimed at a somewhat different market, continuing to target its captive gaming audience. As far as longer-term aspirations to use the console as an entertainment hub with broadband connectivity go, this shall be a contest between Microsoft and Sony! Here's what Steve Ballmer, Microsoft's CEO has to say about it: "We know we have to succeed but there is a broader concept there that we will pursue at some point," Ballmer said, "You can say, is it the of the road or is there a bigger play? And the answer is yeah, there's a bigger play we hope to get over time." (Source: Reuters) NVIDIA: Xbox Contribution The only Xbox supplier (including Microsoft) who is likely to make a 'material' profit from this console is NVIDIA. By assuring Microsoft it could build the brains of this box in the defined time frame, and negotiating a US$200 million advance, NVIDIA pulled off a hell of a coup. We would estimate that the interest income generated from this advance funded much of the chipset's development. In addition, the lack of associated overhead with regard to this chipset ensured that absolute profitability (despite below-corporate-gross margins) would be strong. In fact, we believe NVIDIA generates operating margins north of 20% on the Xbox chipset. On an absolute basis, we believe NVIDIA earns operating income in the range of $10-13 per chipset. ATI Technology: GameCube Contribution ATI's deal to provide the graphics engine for GameCube is starkly different from the NVIDIA scenario. Similar to the relationship Nintendo had with MIPS (MIPS-Q) for the N64, ATI enjoys a royalty model. (The manufacturing of the graphics engine, called Flipper, is by Japan's NEC.) We estimate ATI will receive $2.20 per console and an additional $0.50 per software title. We believe the GameCube will generate approximately $0.09 in EPS for ATI in fiscal 2002. Moreover, ATI has the ability to leverage the technology developed for GameCube into ancillary markets. We are excited about the future with regard to this initiative. Nintendo claims to have sold 500,000 GameCubes in the first week. That translates into $7.5 million in royalty revenues for ATI in the first quarter of next year, and $34.5 million for the whole year. Summary While it appears that NVIDIA is likely to generate a higher level of absolute profitability from its Xbox supply agreement with Microsoft, the console market gives a beneficial boost to ATI as well, which has been struggling with its margins for the past 18 months. In addition, it pushed both firms to develop technology that can be leveraged back into other markets. Both solutions emphasize integration, a necessary skill for a world increasingly focused on minimizing form factors. As semiconductor process advances, it isn't unreasonable to expect these types of solutions to end up in consumer electronics and PC-like devices. We expect video gaming to continue its breakneck growth pace, due to rapidly improving content and the ability of developers to take advantage of the new technology. GPUs are the single most complex semiconductor devices out there (in terms of transistor count), and the pace of development shows no signs of abating. A combination of decreasing die size, increasing bus bandwidths through innovative new bus architectures, lower costs of memory, and ever creative programmers eager to wrest that last little bit of performance, will make it an exciting future. It ain't over yet.

• CeBIT 2008 - Previewing The Trends

  Competition breeds new concepts. Gamers go to the Games|Convention, consumers attend the IFA. With its audience being wooed away, the red-themed CeBIT goes green. The schedule shifts, too, with a greater emphasis on business. 5500 exhibitors now have more space for business thanks to a structure that focuses on solutions. CeBIT 2008 really has a difficult time asserting itself as the world's largest IT expo. In Germany, the Games Convention and the IFA are wooing its audience away, on an international level it faces competition from the CES and Computex. Expo director Ernst Raue announced that the balancing act is now coming to a close. "Our new concept with a more clear-cut profile, clearer structure and more content is very well received". Raue confirmed that 5500 exhibitors from 75 countries had registered for this year's CeBIT, backing up his claim. The new concept rests on the pillars of "Business Solutions", "Public Sector Solutions", Technology & Infrastructure", and "Home and Mobile Solutions". Additionally, the Messe AG, the company behind CeBIT, is expanding the conference program with the "CeBIT Global Conferences". An obvious change is the new time frame. This year, CeBIT is starting a day earlier, namely on Tuesday, 4 March, and ends on Sunday, March 9 2008. As a result, the infamous scavenger field days where hordes of bag-toting treasure hunters storm the expo halls now suddenly takes place on the expo's last day instead of the halfway point. The message couldn't be clearer - business first, cheap entertainment later. Expo management also seem to have learned that while classes of schoolchildren may bolster the number of visitors they could report, it didn't really help the businesses present. This year, the expo management has decided to spotlight the range of topics dealing with "Green IT", with many approaches being showcased in the "Green IT Village" in hall 9. The main focus will be on highly energy efficient solutions and power saving technologies and their contribution to climate protection. Green IT is the buzzword of the moment and was even dubbed the "Megatrend of this expo" by director Raue. Only the future will show whether or not Green IT will be able to spawn attractive new business areas. At any rate, Tom's Hardware was able to draw many interested visitors to its stand at Systems 2007 in Munich, thanks to the DIY Solar PC. The expo is trying to draw companies from the automobile sector as well. For example, you can witness a driver-less VW Passat cruising around the open lot north of Hall 26, controlled by Intel processors instead of a driver - a demonstration in autonomous driving. Those interested in consumer electronics will surely notice that HD-DVD is disappearing from the booths. Blu-ray has emerged victorious from the battle for the next-gen HD video format. Finally, the format war that has been waged at the consumers' expense is over. Celebrities At The Opening German Chancellor Dr. Angela Merkel will open the exposition on the evening of March 3rd. Such celebrities as French president Nicolas Sarkozy, Microsoft CEO Steve Ballmer and president of the EU commission José Manuel Barroso have all announced that they will be speaking at this occasion. Join our discussion on this article!