View Full Version : Microsoft and Nvidia kiss and make up

Drunken Savior
02-07-2003, 06:07 AM
Santa Clara, Calif.-based Nvidia Corp. today announced that it had settled legal arbitration with Microsoft Corp. that first came to light last year. The legal row involved the money Microsoft was paying Nvidia for the custom-designed graphics chips used in Microsoft's Xbox (news - web sites) video game console, which Microsoft buys in bulk.

Nvidia makes the graphics chips that power video systems from many graphics card makers and computer companies, including Apple. Nvidia's chips can be found in Apple's flat-panel iMacs, eMacs and some Power Mac G4s, and most recently in the new 12 and 17 inch PowerBook G4 models.

What's more, Nvidia also announced that it has agreed to collaborate with Microsoft on future Xbox cost reductions, paving the way for Microsoft to see improved manufacturing costs on the struggling video game system. Calling the news "a win for both companies," Nvidia CEO Jen-Hsun Huang said that his company is delighted with results.

"Nvidia and Microsoft can now take our partnership to the next level and focus our substantial resources to maximize the full potential of Xbox game console," Huang added.

The news comes at a good time -- Microsoft has struggled to create a market niche for the Xbox in the wake of Sony's dominance with its PlayStation 2 console and competition from Nintendo with its own, less expensive GameCube offering. Industry analysts have been disappointed with Xbox sales, which have tracked lower than what Microsoft has expected.

Microsoft revealed last week that the business unit responsible for Xbox lost a staggering US$348 million during the company's second financial quarter -- $168 million more than the home and entertainment unit lost for the same quarter a year ago. The stock prices of Nvidia and other independent Xbox component manufacturers fell in the wake of the news and indications from Microsoft that it would look for ways to improve manufacturing costs.

Nvidia's stock was up on the settlement news, trading a dollar higher in early trading Thursday at $11.04.


Definately good news for MS.

02-07-2003, 08:50 AM
:D Hmm.. I wonder what happened..

Maybe Nvidia realized thier GeForce FX is quite the catch up to ATI's Radeon 9700 that they'd hoped.... and wanted to make sure the Xbox continued to have "Nvidia inside" :D...

I wonder what the terms were...

02-07-2003, 10:16 AM
Nvidia wanted out because Microsoft was sticking them with huge losses. The settlement doesn't say if the agreement will allow Nvidia to at least break even.

02-10-2003, 12:26 PM
$348 mill in a single quarter is a pretty large chunk of coin, even for a company with $40+ billion in reserve and other divisions to pull the wait
its kind of like buying $10 mill worth of powerball tickets and losing each time, eventually the gamble turns into a stupidity tax

Neo Otacon
02-10-2003, 12:49 PM
Now that this is settled, nothing is stopping Microsoft from selling their system for an even LOWER price. You know thae wanna do it. I'm looking forward to this year's E3. I'm expecting a coulple major bombshells, not to mention a few minor duds.

02-10-2003, 04:56 PM
Well, nothing as far as Nvidia is concerned you mean.. I don't know the terms of the settlement, but I'm pretty sure MS at least agreed to pay so much for the chips.. so they're free to lower the price.. but they still have to pay Nvidia so much.. which was what the whole ssshebang was about in the first place :D

Hey... Didn't Microsoft reportedly pay so much to another company just recently? Rumors went that it was another developer buyout? Maybe it was just part of the settlement...