ATI comments hint at progress on Xbox 2 hardware

Comments made by ATI Technologies' CFO Terry Nickerson at a conference in New York this week have suggested that the company's development work on the graphics unit for Xbox 2 is nearing completion.

Speaking at the Smith Barney Citigroup 2004 Technology Conference, Nickerson made a short comment about the firm's involvement with next-generation console development for both Nintendo and Microsoft.

"The other one that's starting to become, I think, a factor when you're looking at it from an investment point of view, are game consoles," he told the conference. "We're actually winding down development on some of the Microsoft product. Both Nintendo and Microsoft will be royalties."

While the comment is arguably open to different interpretations, the most likely meaning is that the design of the graphics part which will be used by the next Xbox console is almost complete, and is ready to pass off to the manufacturer - where, of course, a whole new set of challenges will have to be dealt with before the system actually enters production.

This would tie in with the expected schedule for the launch of Xbox 2, which is expected to hit retail well before the end of 2005 in North America at least. It also suggests that developers, who are currently developing Xbox 2 titles on prototype development kits based on PowerMac G5 systems, could start seeing more advanced Xenon development hardware around the start of next year, if not sooner.

The comment also confirms that Nintendo, like Microsoft, will be operating a system whereby it licenses technology from ATI and manufactures it itself - hardly a surprise, admittedly, since this has been the nature of most of Nintendo's previous technology deals, unlike Microsoft's Xbox deals which saw it buying bulk volumes of technology it did not own from firms such as NVIDIA and Intel.