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March 25th, 2007, 20:45 Posted By: wraggster
via mercury news
Rumors have floated in the past month that Microsoft will launch a new high-end version of the Xbox 360. It’s true that Microsoft is preparing to announce the Xbox 360 Elite, a version of the game console with black plastic and advanced features. Several sources confirmed Microsoft plans to add this box to its product line.
The new box will go on sale in limited quantities soon for $479. The details may not be precise here, but I believe it will have an HDMI connector so that you can connect at the highest speed to a high-definition TV. It will come with a 120-gigabyte hard disk drive and will have IPTV capability.
Bill Gates announced in January that the Xbox 360 was capable of serving as a set-top box for IPTV, or Internet Protocol TV, which phone companies such as AT&T are using to offer high-definition movies and scores of channels in competition with TV.
The Xbox 360 Elite will apparently not come with a built-in HD-DVD drive, which will remain an option for playing high-definition movie disks. In the spring, the new machine will be available in limited quantities and it will reflect a redesigned motherboard. Tina Conley, an outside spokeswoman for Microsoft, declined to comment on Saturday. How solid is this information? Some details may be wrong. I’m not looking at any press release right now that describes it all. The details will be announced soon enough.
I’ve been waiting for Microsoft to make a move like this. The company has scheduled a motherboard redesign and cost reduction for every year, but this is the first major change to take the costs out of the inside of the Xbox 360. By the fall, the company will also implement a chip redesign, shifting from 90-nanometer production to 65 nanometer production. That will bring costs down fairly dramatically and will enable Microsoft to make the box in larger quantities by the fourth quarter.
Every other year, the company plans to shrink the size of its chips. It is overdue for a shift from the 90-nanometer chips that it started with in 2005 to the 65-nanometer chips commonly in production elsewhere. That transition isn’t yet complete but it should be by the fall.
Why is it important to miniaturize a chip? When you make the width between circuits in a chip (the difference between 90 and 65), the technology gets better. The electrons travel shorter distances, the circuits are more reliable, defects can go down, yields go up, and you can fit the same chip design in a much smaller area. Since chip costs directly relate to how much material you use, a smaller chip is cheaper to make.
Every console maker will have the opportunity to reduce the costs of its chips. But how the console makers capitalize on that decision depends on strategy. Michael Pachter, an analyst at Wedbush Morgan, said in an email that he believes Microsoft will launch its elite box, but he isn’t sure how it will position the other boxes, especially the Core unit. I expect the Xbox 360 with the 20-gigabyte hard disk drive will continue to sell for $399 and the Core unit, which has no hard drive, will sell for $299.
At $479, the Xbox 360 Elite will still be cheaper than Sony’s $499 20-gigabyte PlayStation 3 and the $599 60-gigabyte PS 3. But it will match the Sony box with the HDMI connector feature. The Sony box is not yet capable of IPTV.
It is interesting that Microsoft hasn’t added the HD-DVD drive as a permanent feature. The format war with Blu-ray is still going on, and that drive would add considerable cost. Microsoft sells it separately for $199.
The larger hard drive on the Xbox 360 Elite will make it much more useful for downloading movies and serving as a digital video recorder, which is one of the primary uses of an IPTV set-top box. High-definition movies can take up five gigabytes or more, while standard movies take about a gigabyte of storage space. Hence, 120 gigabytes is enough for, accounting for 10 gigabytes used by the system for other things, about 22 HD movies.
In any case, this is going to put some pressure on Sony and it will enable Microsoft to patch some holes in the technological capability of the Xbox 360. It will enable Microsoft to please the relatively small group of hardcore gamers who care about having the highest-end technology in the living room. It’s those gamers who are most tempted by the PS 3. HDMI, for instance, will enable someone to view games and movies the way they were meant to be seen in either 720p or 1080p
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