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With a tighter market for game consoles, Microsoft Corp. disclosed it will take a phased approach to updating its Xbox 360 videogame console. Following the footsteps of the Sony Playstation2, Microsoft is gradually moving its existing chips to new process technologies as it evolves toward a smaller, quieter, cooler system dubbed Falcon. Microsoft has already moved two chips in the Xbox 360 from 90nm to 65nm process technology. The processor was not one of them. Ultimately the company may also combine some of the chips to reduce board space. One big focus for the Xbox 360 plan is to lower power consumption while maintaining performance. "By the time everything is moved to 65nm the power consumption will be less than half of what it was when it was first launched," said a source close to the console who wished to remain anonymous. Bulky power converter
One of the early criticisms of the Xbox 360 was that it had an external power converter about the size of a brick. Cost reduction is the focus for the latest consoles from both Microsoft and Sony. Sony announced July 9 plans to cut the price of its PS3 to $500, within $20 of the high-end version of the Xbox 360. One analyst said the move would not greatly improve Sony’s competitive standing because the PS3 needs fresh game titles more than it does a cost reduction. "Sony could put its price to zero and it would not help that much because console sales are not based on price so much as availability of games," said Jon Peddie, principal of graphics market watcher Jon Peddie Associates. "Sony is in a tough spot. They are not getting the market share they thought so they are trying to stimulate demand, but the Xbox 360 is still under the PS3 in price," Peddie added. The Nintendo Wii game console is even lower in price at $250 and, like the Xbox, is selling briskly. It’s not clear exactly when Microsoft will roll out its Falcon version of the Xbox 360. The source close to the company said Microsoft plans to introduce multiple flavors of the system over time, each with its own internal and external code-names. Streamlined version
Each new version generally integrates or moves various chips inside the box to new process technologies. At some point Microsoft will redesign the case, making it noticeably smaller and quieter for the version likely known as Falcon. Each system will remain architecturally similar and compatible with the original Xbox 360. Console makers need a stable platform "at least for three to five years" so game developers can recoup the multiple millions they spend developing new titles. Thus console makers "hold the platform stable, but they hollow out the inside," Peddie said. He added that a Marvell communications chip could be one of the new 65nm parts shipping in the current Xbox. Microsoft recently announced it would take a billion-dollar charge to extend the warranty on the Xbox 360 from one to three years due to widespread reports of failures with the console. The source close to Microsoft would not say what problems Microsoft had with the design, but he did indicate there were multiple manufacturing issues that have been found and fixed. "We think it was a heat problem, so the move to 65nm chips helps with that issue, too," said Peddie. (() | 
