The triumvirate of next-generation consoles are all out. The war is now on. And IBM Corporation is sitting comfortably on its fortune at the backstage. As all of you might be aware, it was this company who developed the Power chip that powers Xbox 360 and Wii, as well as the Cell chip found inside the PlayStation 3.
The videogame deals earned IBM up to US$ 2.9 billion last year and US$ 2.5 billion in 2004. At the end of 2006, which by the way is just few days away, the company is expected to see about US$ 3.7 billion in sales of chips and associated design services. Aside from the actual sales, IBM has formed a new "technology collaboration solutions" unit that is expected to post US$ 4 billion in revenue this year.
This is actually a glaring contrast to status of the company before the deals. Prior to 2004, IBM was struggling to attract enough outside chip-making work to cover the enormous cost of manufacturing. As a result, their hardware division suffered a lost of US$ 252 million in 2003. The head of the said division, William Zeitler, couldn't hide his astonishment:
I think of this at the same stage of development that outsourcing was in the early '90s. There were a lot of people skeptical and now it represents a large part of IBM's portfolio. We had exactly the right proposition at exactly the right time. Ten years ago it would have been inconceivable that all the game processors would have used IBM product. Nobody would have thought of it because all we had was standard things.
Now that they've conquered the videogame market, IBM is looking on new prospects. They reported that possible future application of the chip includes computers for medical imaging, defense and complex simulations. Currently, IBM is expecting to ink a deal with companies like Mercury Computing Systems and Toshiba.
