Comments made by ATIs CFO Terry Nickerson, suggest that the Canadian company may be about to deliver its graphics chip for XBox 2 to Microsoft. Nickerson also commented on the company's partnership with Nintendo and on what ATI expects to gain from the partnerships.
The actual quote which gave rise to the speculation is as follows : 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... we're actually winding down development on some of the Microsoft product. Both Nintendo and Microsoft will be royalties.
It is extremely difficult to extract anything specific from the above statement but the use of the term winding down may refer to the completion of the biggest part of the development process. Typically, at this stage, the chip maker would send it to Microsoft for further testing and further changes are likely to be requested before the final version makes its way to the heart of XBox 2 or Xenon. Apparently people who are aware of how a console development cycle takes place, have said that the timing is right and XBox 2 should be ready in a year's time, fall 2005.
ATIs other project, a chip for Nintendo's Revolution console is not yet as urgent since it is expected that the GameCube successor will not be ready until the end of 2005.
Speaking at the Smith Barney Citigroup 2004 Technology Conference, Nickerson was not shy about revealing the exact figures ATI expects to gain from its next-gen console contracts. The other market that has had a lower profile recently is the follow-on development for both Nintendo and the Microsoft game console product. We should start seeing, depending on when those particular companies bring their products to market, that will turn into a royalty play for us both those contracts. And we have found that with Nintendo, historically that's been around USD 25 million a year. And it's been a constant flow of royalty.
