[quote name='Graystone']300 is reasonable if all the stuff they talking is not hype but actually a good system, it kinda make me made I have only had a xbox like 2 years or so. I have had a PS2 since release and they are older then xbox so they should be the first with new console. Not xbox, but as long as backwards compatibility is true I am fine with it.[/QUOTE]
I really don't understand where people get this 'Mother May I?' mentality about the console business where the previous first mover has dibs on the position for the next generation. (Leaving aside Sega's abortive attempt at taking that role.) The only thing that matter is economic opportunity.
The thing to remember is that Microsoft has ample reason to stop production of the current Xbox as soon as possible. Due to the rushed development of the Xbox it used expensive parts with functionality beyond what was needed for a game system. Even worse, because Nvidia's business model for what was at the time their most powerful chip required high margins, as seen in the PC video card market, the Xbox needed to sell in much greater volumes to make up the difference. Since it took a long time for Microsoft to build up a good software range beyond Halo those sales didn't happen but that didn't stop the need to keep parity with Sony when they planned a PS2 price drop.
This led to them putting pressure on Nvidia to cut the price on their chips. Unlike most game consoles in recent time where the company owned outright the chip designs the IP for the Xbox co-processors remained with Nvidia. Nvidia manufactured the chips through their foundry partners and sold them to Microsoft. This meant MS wasn't free to shop around for different manufacturing partners and had to negotiate with Nvidia for the die shrink that would have reduced the cost of producing the chips. Nvidia had no incentive to make them a good deal on this since they had already moved on to more elaborate designs and this would only offer more low margin sales at best.
That die shrink was critical to making a cheaper xbox cost effective. Once the cost of the design itself is covered the much increased number of chips per wafer means a much lower cost per chip. It also means the chips can run at a lower voltage with lesser cooling requirements. It was die shrinks to the respective chipsets that made it possible for Sony to reduce the size and cost of the PS1 so drastically and has already done the same for the size of the PS2. The retail price of the PS2 can be dropped any time Sony sees sales drop below an acceptable level, keeping the platform growing for fra longer than if the original chipset were still being used.
Microsoft already takes a loss on each Xbox they sell. An Xbox owner must buy several games before Microsoft sees a penny of profit on the unit. Keeping parity with Sony's next price drop will only make this worse. Unless Nvidia suddenly has a change of heart, which is extraordinarily unlikely considering their partnership with Sony on the PS3, the only solution is to retire the hardware while still allowing for platform growth.
Enter Xbox 360. IBM as a partner is far better suited to the console business than Intel since they are well invested in doing custom designs for low margin products, as seen in the Gamecube. On the video side, given the greater experience and time to work out a better contractual relationship, ATI has to have guranteed at least one die shrink as part of the deal. so long as Microsoft can get the software in place to make the Xbox 360 sell on its own merits, they can afford to effectively give away Xbox compatibility with the hard drive. An Xbox 360 hard drive sold along with one Xbox PH game will actually make some money for MS while the same game sold alongside an Xbox is barely working off the deficit.
