IBM has begun shipping millions of microprocessors to Nintendo, keeping the gaming company on track to launch its Wii gaming console as early as November.
The news comes days after Nintendo competitor Sony Computer Entertainment revealed it would deliver only half the number of PlayStation 3 video game consoles by the holiday shopping season that its customers had expected.
IBM has been shipping chips through the third quarter, and has reached high-volume production, the company said Thursday.
IBM's new "Broadway" chip is a 90-nanometer process version of the 180-nm architecture "Gekko" chip that Nintendo has been using in its GameCube console since 2001. IBM was secretive about further details of the new chip, saying only that it has a Power Architecture core specially modified for the Wii platform, and that it draws 20 percent less power than Gekko while boosting performance.
But one thing is sure -- the Wii deal will earn a lot of revenue for IBM. Nintendo has shipped 20 million units of its GameCube since it launched, and IBM expects that volume to continue with the next-generation Wii platform, said Ron Martino, director of IBM's Technology Collaboration Solutions unit.
In fact, console vendors are expected to ship 135 million gaming units over the next seven years, and IBM will build the chips for most of those platforms since it also makes the chips for Nintendo's competitors, Sony's PlayStation 3 and Microsoft's Xbox 360, he said.
"With the combination of the three main gaming consoles in the world, we more or less dominate this segment," Martino said. "It's hard to complain about being in the games' business."
Nintendo has not announced a target shipping date for Wii, but analysts expect it to arrive in time for holiday sales, said IdaRose Sylvester, a senior research analyst with IDC.
"They don't need to get on the shelf until mid-November to make a huge splash. And they have a little more running room now that we know PlayStation will not be out in the quantities expected," Sylvester said. Microsoft's Xbox 360 has been selling since the 2005 holiday season, but by winning contracts to build chips for the top three console vendors, IBM has effectively insulated itself from market fluctuations.
"Maybe selling fewer PlayStation 3s this year won't hurt them as much if people buy more Wiis. It could be a net neutral ... IBM wins either way," she said.
IBM also uses its research in gaming chips to create new revenue streams. As systems adopt high-definition Blu-ray and HD DVD disks, the chips must keep up with high-volume data streaming for workload, visualization and interaction. So although all three gaming chips are proprietary, IBM has been able to gain extra business by selling related versions in other industries. The Cell Broadband Engine chip it makes for Sony has also been popular with designers in aerospace, defense and medicine.