Electronic Business Online has published an article from Dean Takahashi, author of the book Opening the Xbox, which detailed how the original Xbox came to be. This time, he takes on the critical missteps that Microsoft made in the original Xbox, and how they tried to fix them in the new Xbox 360. The main problem Microsoft had with the original Xbox was the ownership of the hardware; built from largely off-the-shelf components from partners Intel and nVidia, Microsoft owned very little of the intellectual property for the engine that made the Xbox run. This would make reductions in cost very difficult, and in one case, these issues leaked into the public with Microsoft’s argument with nVidia over GPU costs. This also limited what Microsoft could do with the original Xbox, and while Sony was releasing a streamlined PSTwo to the market to revitalize their market share, Microsoft was stuck with the clunky Xbox. This would also bite them in their plans for the Xbox 360; since Microsoft did not own the IP rights to the GPU in the original Xbox, they would be forced to make a deal with nVidia to license their technology so that they could include backwards compatibility as a feature.

This time around, asserts Takahashi, Microsoft would “lead the integration of the hardware, own the intellectual property, set the cost-reduction schedules, and manage its vendors closely.” These restrictions would force Intel from the race, and allow IBM to gain a foothold with its PowerPC architecture. The high cost of doing business with Microsoft also put nVidia out of the race, and ATI, perhaps a little more hungry for market share, saw the partnership as an ideal match for them.

Interestingly, Microsoft would face new challenges by attempting to integrate all of the features and technology by itself. A core decision by Microsoft to “to double the amount of memory in the box, from 256 megabytes to 512 megabytes of graphics double-data-rate 3 (GDDR3) chips.” This would effectively cost Microsoft nearly a billion dollars over five years, and would come into play later, when one of Microsoft’s suppliers would be unable to provide a reliable source of the 700mhz GDDR3 chips that would be required for the Xbox 360, and Microsoft would have to do the tedious work of sorting the supply for the memory that they would need. Microsoft blamed component shortages for the lack of availability of the Xbox 360 during the holiday season, and signs point to this memory shortage as a key reason. An Xbox 360 with half the memory might have meant that more customers could have had the console in their hands for Christmas, but this had to be pitted against the worry that Sony would follow up with a PS3 with vastly more memory. It is interesting to get some further insight into the process that went into building the Xbox 360.

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