By Dean Takahashi
Thursday, August 23rd, 2007 at 5:00 am in Dean Takahashi, Dean and Nooch on Gaming, General.
Falcon is coming your way this fall. The first Xbox 360s with it are probably on ships coming from China.
Readers of this column will know that Falcon is the code name for a board that houses the first Microsoft 65-nanometer chip for the Xbox 360. We disclosed the exclusive story on the existence of Falcon just before E3 in July. Now we know some more, thanks to information from people familiar with Microsofts plans.
The timing of Falcons arrival is going to create a difficult balancing act for Microsoft. Bear with me. There is some technical explanation to do here, but it really does matter to consumers when you think about the implications.
Microsoft, of course, doesnt think you need to know anything about Falcon. David Dennis, a spokesman for Microsoft, said in a statement, Updating components and moving to advanced silicon technologies is common practice within the industry but for competitive reasons, Microsoft does not disclose the components of Xbox 360 consoles.
On the other hand, I do think it matters. It touches on a lot of subjects: the how part of the business of making money in the console war, the timing of product refreshes and when consumers should dive into the market, and the aftermath of the billion-dollar write-off in which Microsoft promised to repair defective Xbox 360 consoles for free (for up to three years after purchase) because of unacceptably high failure rates.
When I went to E3, several Microsoft sources said they had never heard of Falcon. I scratched my head. But Ive been able to confirm that it does indeed exist and I know more about its schedule. Falcon is the name for the board that houses the 65-nanometer microprocessor from IBM. The board does not include a 65-nanometer version of the ATI graphics chip for the Xbox 360. That version of the graphics chip is coming later. A good question here is why not. Doesnt Microsoft really need to reduce the heat coming out of that graphics chip?
I had expected that Microsoft would have made the switch to 65-nm microprocessor and graphics chips a long time ago. After all, it launched the Xbox 360 in the fall of 2005 with 90-nanometer chips, about the same time that Intel was launching its first 65-nanometer chips. This 65-nm IBM chip will work with both the 90-nm and the future 65-nm version of the ATI graphics chip.
Of course, Intel has the billions in cash available to accelerate its shift to chips with smaller circuits. In general, moving to smaller circuits pays off big time and it creates a kind of technological arms race with other chip makers such as Texas Instruments and IBM. If you can cut costs, improve performance and increase reliability, your competitors better do the same or they will be toast.
Moving to the smaller circuitry delivers a lot of the benefits of Moores Law, which holds that a chips number of transistors, or fundamental electronic components, doubles every two years or so. This gives chip makers a couple of options. Companies like Intel keep pushing the performance edge. So they take the bounty of Moores law and pack more transistors onto the same size chip. This makes the chips faster.
In the case of console chips, the chip makers dont use the smaller circuits to make the chips faster. Console architectures are fixed in stone because game developers need a stable platform. If theyre designing games for a couple of years, they want to know exactly the kind of performance they should target. They dont want a moving target. So that means that a consoles performance generally stays the same during its life cycle.
So the console makers take advantage of Moores Law by cutting costs. With smaller circuitry, they take the same number of transistors that they had on the earlier chips and put the transistors on a chip with a smaller physical area. Hence, the console makers can get smaller chips. Those chips generate less heat (as long as they deal with the leakage, or standby heat, properly), and they operate more reliably. Whats more, smaller chips require fewer materials so the smaller chips carry lower costs.
The latter issue of costs is a important issue for Microsoft. It is still losing a lot of money in the console business. By reducing the cost of its hardware, it can afford to cut prices on the consoles and minimize the losses. In fact, just as Falcon is arriving, it is no surprise that Microsoft has finally cut the price of its Xbox 360 Premium console by $50 to $350.
Of course, reliability matters too, because of the billion-dollar write-off. By shifting to a new board and a new processor, Microsoft has the chance to reset the bar on product quality.
In general, Microsofts plan was to redesign the motherboard every year and introduce a new generation of chip circuitry every two years. By that standard, we are really due for the arrival of the 65-nanometer chips.
If you recall, Microsoft introduced Zephyr, the code-name for the new motherboard for the Xbox 360, earlier this year. That coincided with the launch of the Xbox 360 Elite, the version of the console with a 120-gigabyte hard disk and an HDMI port. Inside the console, the new motherboard had the HDMI connector.
Now you would have thought that Zephyr would have come with the 65-nanometer IBM microprocessor. But it didnt. The Xbox 360 Elite was introduced in limited quantities and it used the older 90-nanometer chips. The design for the 65-nanometer version of the IBM chip has been ready since last year. Why didnt Microsoft introduce it earlier?
Well, Microsoft had to make a trade-off. It chose to put more of its hardware engineering team on the problem of repairing defective Xbox 360 consoles and troubleshooting how to redesign the console so that it would function properly. For whatever reason, that led to a delay in the launch of Falcon. (Maybe that tells you that hardware and chip engineers are limited quantities at Microsoft). Getting something like 65-nanometer chips out is an enormously difficult undertaking. Many chip companies have faltered in the past in such transitions, and you never know how quickly they can get them done. Clearly, Microsofts team was challenged by the hard task of dealing with the defects and getting the Falcon project out the door. Were they stretched too thin?
So Falcon is coming later than expected. But I have confirmed that it is coming. In July, Microsofts hardware team was in the midst of qualifying Falcon and the IBM 65-nm microprocessor so that it could get all the bugs out. Now those chips are in the first batches of the new consoles that are coming in ships across the Pacific from China, where Microsofts contract manufacturers assemble the boxes. If they get here in time, then many of those machines could be ready for fall sales.
Heres where it could conceivably start to matter to consumers. The Falcon-based machines with the 65-nm chips will only go on the machines with the HDMI ports. Aaron Greenberg, Microsofts group product manager for the Xbox 360, told me some weeks ago that HDMI will initially be available only on the Xbox 360 Elite and Halo 3 special edition boxes. Over time, the Falcon-based machines will replace the Zephyr-based machines and appear on the Xbox 360 Premium units, which currently cost $350 in the U.S..
Arguably, the Falcon-based machines will be inherently more stable. Machines that use them will probably have fewer thermal issues. Those machines should be more reliable, logically speaking. But that is conjecture. I havent seen one of these Falcon-based machines and no one can say whether they are in fact more reliable.
So if you wait to buy an Xbox 360 that has the Falcon board in it, then logically youre making a smart move. Youll be buying a console that will last longer and have less risk of failure. However, that is theoretical. I have no idea whether that will be the case.
But heres the problem for Microsoft. They have a lot of inventory of the older 90-nanometer machines. Many of these machines dont have the HDMI ports for sure. It has to sell these machines out before it starts selling the Falcon-based machines. That means that a lot of consumers are going to be buying machines that dont have the highest quality.
If youre in the market for an Xbox 360 but really want to wait for the highest-quality machine, in theory you might want to wait until Falcon. Heres the trick. Some of those Xbox 360s with the HDMI ports, especially the Xbox 360 Elites, are being made with 90-nanometer chips on Zephyr boards. Some of them will have 65-nm chips on Falcon boards. I really dont know how youre going to be able to tell the difference. If youre buying an Xbox 360 without HDMI, then for sure you arent getting Falcon.
There will not be other features on Falcon could have used, but Microsoft chose not to implement them. One thought was to take advantage of the smaller space for the Falcon board by taking a part of the big power supply and moving it inside the console. Thats not happening with Falcon.
Microsoft has no intention of telling you which box has 65-nanometer chips on the inside. Greenberg says that the company reduces the costs of the console on a continuous basis but doesnt disclose any information about such changes. So you have to wait a reasonable amount of time until the old inventory is flushed from the system.
When will that be? I dont know how fast Microsoft can sell its boxes. The price cut will certainly help. But if people wait for the Falcon boxes, then that will slow the sales rate down. If you figure it will take some time to ramp up Falcon, get the chips into the boxes coming off the line, and ship the boxes from China (a six-week journey), then it will be some month before the Falcon machines arrive. Its probably just in time for Christmas.
Is it worth the wait? You have as much information as I do on that. You could predict that the Falcon machines will be more reliable. Perhaps Halo 3 will really accelerate console sales. In that case, the Falcon machines may show up pretty fast on store shelves. It remains to be seen. But at least now you can make an educated decision about when you should use your hard-earned money to invest in a Microsoft game console.
In the age of transparency, Microsoft should have disclosed this themselves. That said, Sony isnt going to tell you when they make the transition to their 65-nm chips. Thats secret information that it wouldnt want Microsoft to know. I dont know if will help you with your shopping plans or if it really matters in all of the calculations that go into whether to buy a video game console. But now you have a better picture of whats happening.
