|Microsoft’s next move? Code-name FalconPublished by endless on Monday, July 09, 2007
Mercury News is reporting a price cut move by Microsoft. Its code name is Falcon, which is a move to 65 nanometer chipsets. Cpu, and Gpu. With perhaps beefed up heatsinks, smaller motherboard, and possibly sticking the power brick in the console.
Its also mentioned that perhaps Microsoft has plans down the road for 45 nanometer chipsets.
Lastly a Wedbush Morgan analyst expects the recently released Xbox 360 Elite to go from USD 479 to USD 399, the Premium model to see a drop from USD 399 to USD 349 and the Core system to be reduced from USD 299 to USD 249.
Click read more to view full articles.
Here’s a trade secret that Microsoft is unlikely to publicly acknowledge.
Sony’s cutting the price on the PlayStation 3. How will Microsoft react? We’ll find out soon. But a key part of the strategy is going to be a project code-named Falcon.
Falcon is the name for the latest internal electronics in the Xbox 360. It will have an IBM microprocessor and an AMD/ATI graphics chip that are manufactured in a 65-nanometer production process. These are cost-reduced chips that do the same thing as their 90-nanometer predecessors, but they’re smaller.
With smaller chips, Microsoft gets a bunch of benefits. They won’t generate as much heat. So the risks of overheating — one of the main reasons behind Microsoft’s billion-dollar write-off for repairs and extended warranties — are much lower. The chips may also cost half of what it took to make them before because they use less material and fewer manufacturing steps to produce.
Everyone knows that console makers cut the prices and costs on their consoles over time. But you may not be aware that the primary chips – microprocessor, graphics, and the Ana video processing chip – are the bulk of the cost of the machine. Microsoft started making the Xbox 360s in August, 2005, with a 90-nanometer process. It is overdue to switch to the newest technology, 65 nanometers, but that day has finally come. It may be some time — a year, maybe two — before it moves on the a 45-nanometer process.
But it’s worth it. I recall that Ken Kutaragi said that by moving along the semiconductor manufacturing cost curve with the PlayStation 2, Sony was able to reduce the size — and therefore cost — of the PlayStation 2’s original chips to just 13 percent of the original over the life cycle of the PS 2.
If you cut the costs on the chips, you can cut the overall cost of the system. You get ancillary benefits such as using a smaller motherboard, more air flow inside the console, and the ability to take the big giant power supply in the Xbox 360’s power brick and put it inside the console.
Microsoft is in the process of qualifying the new Falcon chips and motherboard this summer. I expect it will launch Xbox 360s with the new Falcon innards this fall. That is why the company has been able to say that it has solved its manufacturing quality problems. Microsoft is likely to spend a little more money on heat sinks to make sure that the overheating problem doesn’t resurface with Falcon.
The good thing about the smaller chips is that they will likely be easier to make in mass quantities and they shouldn’t fail as often. Quality should automatically go up. That’s what folks said about the 90-nanometer generation. But the 65-nanometer production process is a known quantity at this point at places such as IBM for sure and possibly at other suppliers such as Taiwan Semiconductor Manufacturing Co. So rather than fix the problems with the 90-nanometer machine, Microsoft has the easier problem now of getting a 65-nanometer machine to work right. I suspect that is why Robbie Bach, president of the Entertainment & Devices group, said on Thursday on a conference call with analysts that the company has “its hands around it at the engineering level.”
But once this machine is in the field, Microsoft will have a few options. It can take the power brick and put it inside the same chassis. It can also make a smaller version of the core, but this involves considerable redesign and retooling resources. And it could also beef up the console and make room for more costly things — as it did with the Elite.
It’s anybody’s guess as to what Microsoft will do with the Falcon as its base platform going forward. But Sony had better watch out. Microsoft is moving ahead of Sony on the cost-reduction curve. It would be risky for Sony to get into a price war with Microsoft.
Now it’s easier to see why Microsoft still expects to be profitable in fiscal 2008 with the Xbox 360 business. In this fiscal year, Microsoft will introduce a major cost reduction with the Falcon platform. It will launch Halo 3. And it has already written off in fiscal 2007 the costs of repairing consoles for the next few years.
Falcon is a fundamental part of the strategy that Microsoft is using to try to beat Sony. Is it going to be good enough to beat Nintendo on costs? Very doubtful. Nintendo can play the cost-reduction game just as Microsoft can. Falcon certainly means that Microsoft can afford to cut the price of the Xbox 360 going forward. Whether it does so depends on how aggressive it wants to be at winning the lead market share in the business. But everyone knows that if you cut your hardware price too much, you lose money. After all, Microsoft lost an estimated $3.7 billion on the original Xbox.
When I asked David Hufford, a Microsoft spokesman, about Falcon on Friday, he said I was telling him something new. When I asked Peter Moore, head of games at Microsoft, about Falcon on Thursday, he said, “We have a bunch of different projects that cost reduce and improve quality as you find issues, as does our competition. Once you get millions in the field, you learn about the box under all kinds of different circumstances, you can adjust and tweak what you do accordingly.”
$80 off Elite, $50 off Premium models to maintain pricing advantage
Following Sony's USD 100 price cut announcement, leading industry analyst Michael Pachter has gone on record predicting that Microsoft will quickly follow its rivals' lead and slash prices on all Xbox 360 models.
The Wedbush Morgan analyst expects the recently released Xbox 360 Elite to go from USD 479 to USD 399, the Premium model to see a drop from USD 399 to USD 349 and the Core system to be reduced from USD 299 to USD 249.
"We expect Microsoft to follow with a price cut of its own," said Pachter.
"Last week, Microsoft announced a slight Xbox 360 shipment shortfall and we do not believe that the company is prepared to allow Sony to erode its pricing advantage.
"We think that the console manufacturers will continue to cut price as their production costs come down, and expect sales to ramp significantly this holiday season," he added.
The company does not expect Nintendo to reduce the price of the Wii or DS, "as sales for both are still very strong and are anticipated
( Subscribe via
Friday, July 03
| The Catch: Carp & Coarse Out Now on Xbox One,|
Thursday, July 02
| BEN 10: Power Trip announced for XB1, PS4, SW|
| Marvel's Avengers Confirmed for Xbox Series X|
Wednesday, July 01
| Sisters Royale: Five Sisters Under now digita|
| WW1 FPS Tannenberg coming to XB1 and PS4 cons|
| The Otterman Empire hits XBOX, PS4, SWITCH an|
| Top 10 Esports games for 2020|
Tuesday, June 30
| Yes, Your Grace is OUT NOW on XBOX and SWITCH|
| New Xbox Games with Gold for July 2020 Reveal|
Monday, June 29
| Control's 'The Foundation' is available now o|
Friday, June 26
| New Games Coming to Xbox Game Pass for PC and|
| DiRT 5 digital pre-order's go live on Xbox On|
Thursday, June 25
| Assetto Corsa Competizione races onto Xbox On|
Wednesday, June 24
| “Night Call” Out Now And Included With Xbox G|
| West Of Dead: Out Now and included in Xbox Ga|
Tuesday, June 23
| Disintegration Launches On Xbox One, PlayStat|
| 4 Games Bundle: Luc Bernard Collection Availa|
Monday, June 22
| STAR WARS: Squadrons Xbox One digital pre-ord|
Friday, June 19
| Windbound hits Xbox One, PS4, Switch and PC o|
| “Othercide” is now available for digital pre-|
Thursday, June 18
| Super Soccer Blast kicks off for Xbox One|
| Hard West Ultimate Edition XBOX ONE Digital P|
Wednesday, June 17
| “Tower Of Time” now available for digital pre|
| Glass Masquerade Double Pack: Available Now O|
Tuesday, June 16
| Radical Rabbit Stew out now for Xbox One, PS4|
| Pathfinder: Kingmaker XBOX ONE Digital Pre-or|
| 1971 Project Helios Hits XBOX One, PS4, Switc|
Monday, June 15
| Procedurally generated 2D platformer “Pity Pi|
Friday, June 12
| Greymoor: The New ESO Chapter Out Now |
Thursday, June 11
| Charlotte Cracker Joins ONE PIECE: PIRATE WAR|
See All Xbox 360 News | Xbox 360 News Archive