Xbox 360 Teardown Highlights IBM’s Dominance in Next-Generation Consoles

IBM and Microsoft Corp. once teamed up to dominate the PC market—but can they make history repeat itself in the video-game console business?



A dissection of Microsoft’s new Xbox 360 Premium video-game console conducted by iSuppli Corp.’s Teardown Analysis Service indicates that IBM silicon is a key factor driving the cost and functionality of the product.



Beyond the Xbox 360, IBM chips are also at the heart of two other next-generation game consoles set to hit the market in the coming months. Thus, while it’s too early to say whether Microsoft’s Xbox 360 will prevail in the gaming market, IBM is a sure winner in consoles due to its across-the-board design wins.



IBM designed and co-manufactures the custom microprocessor that powers the Xbox 360. The microprocessor is a triple-core PowerPC that runs at a frequency of 3.2GHz. At a cost of $106, this single part accounts for 20.2 percent of the total Bill-of-Materials (BOM) cost for the Xbox 360 Premium, according to preliminary findings from the iSuppli Teardown Analysis Service.



The IBM chip and other integrated circuits in the Xbox 360 total an estimated $340 per console.



Other key semiconductors in the Xbox 360 include the Graphics Processing Unit (GPU), the memory and a Southbridge I/O controller. The GPU, designed by ATI Technologies to provide groundbreaking High-Definition (HD) graphics, costs an estimated $141, including embedded DRAM from NEC.



Factoring in costs for the hard disk, the DVD drive, enclosures, the Radio Frequency (RF) receiver board, power supply, wireless controller, cables, literature, and packaging – the total BOM cost for the Xbox 360 Premium reaches $525, well above the retail price of $399.