Next Gen Console Winner Is IBM

Via Joystiq, an article on the Seattle Times points out what many of us have already known: IBM is the real winner of the console war. The company is providing chips for all three consoles, and is busily crafting money hats for everyone involved. From the article: "Using the engineering consulting work it did for Microsoft, Nintendo and Sony as a model, IBM has formed a new 'technology-collaboration solutions' unit that's expected to post $4 billion in revenue this year. Internal projections call for that division to hit $10 billion by 2010 and $20 billion by 2015. Those targets may sound high for a $91 billion company that is barely able to grow overall revenue. But hardware-division chief William Zeitler hopes to achieve them by replicating IBM's video-game collaborations in such industries as telecom, defense and medicine."

Comments

Re:Don't Forget the Silicon

[stevesliva]

But every time a technological war is waged between two competitors in the United States, the default winners are the companies in the Philippines and other silicon producing countries.

Sort of true. TSMC in Taiwan is a big winner, being the foundry for the ATI and Nvidia GPUs, while Chartered in Singapore has been doing great as a second source for the XBox chip, the original source being IBM's East Fishkill fab. However, the Cell chip is made by IBM in East Fishkill and Sony in Nagasaki. The Wii chip is made by IBM in East Fishkill. The GPU in the XBox also a second die in the package fabbed by NEC in Japan. But no doubt there's a number of other chips from foundries and IDMs all over.

Re:To be literal

[Klintus Fang]

not even that.

the real point as I see it (and as the article states), is that IBM is leveraging the experience they have working with the console makers to solve their technical design problems to make a business unit that will pursue the same kinds of collaborations in telecom and elsewhere. it's not about selling the chips. It's about selling the technical expertise that is required to design products that use those chips.

nobody wins big by manufacturing the components that go into the console. "winning the micro-chip wars for non-PC gaming" is not much of a victory at all. The console makers sell those things at a loss for the most part, which means they nickel and dime their component suppliers to death on the costs. If you provide the chips (gpu/cpu), you win bragging rights, but that is about it. From a pure profit perspective you'd be much better off selling those chips to the non-console market where the profit margins on hardware are higher.

It's not about the chips. I think that probably works well for IBM's business model. I've never quite been able to figure out exactly how IBM operates, but they don't seem interested in making profits on hardware sales (not primarily anyway). They seem interested in making profits on selling high end technical services to other businesses.

Apple.

[CDPatten]

Anyone else notice Apple leaving IBM hasn't made a blip in their profits? They really haven't skipped a beat.

In fact, since Apple went to intel chips, it almost seems like IBM has been able to expand and focus on other chips projects like the gaming systems. It seems like getting rid of Apple was a pretty good thing for them.

PS
go ahead I'm ready... let the Apple loving flaming begin.