I assure you, that's not how it happened. AMD was able to match the
price, but, Microsoft, gave Intel a much larger margin, because MSFT
knew that Intel had the manufacturing capacity to guarantee delivery of
CPUs for Xbox, while AMD (unless they dedicated their fac capacity
almost totally to Xbox) did not.
AMD was going to give them a K7-based Duron, with like a 64K L2 cache.
Those things were in the 80 sq.mm size range even in the 180-nm days.
AMD could stamp those out by the thousands per day without breaking a
sweat. And since they were being produced at the 700Mhz speed range,
there wasn't likely going to be a lot of defects.
Intel gave them a P3-based Celeron in the 700Mhz range instead. Neither
the Celerons nor Durons take much of a chunk out of either
manufacturer's capacity.
In fact, MSFT never had any real
intention of going with AMD -- they just leaked the rumours that they
were to scare Intel into giving them a lower price.
Wow good tactic, that was really playing it close to the vest. I mean
they even went so far as to have Nvidia design the chipset around AMD's
Hypertransport specifications, and even work up several preproduction
prototypes with the AMD/Nvidia combination so even Nvidia must've
thought it was going to AMD. Then when it went to Intel Nvidia had to
spend another couple of months redesigning the chipset to interface with
the Intel chip instead.
When Nvidia introduced its Nforce chipsets, which were direct
descendents of the Xbox chipset, the first versions were only meant for
AMD processors. It's as if they were always meant to be used with AMD
processors.
Same thing with
GigaPixel versus nVidia. Notice that *both* Intel and nVidia have
walked away from Xbox 360? MSFT didn't exactly make a lot of friends
on that transaction.
MSFT didn't exactly sell a hell of a lot of the original Xboxes either.
It's price discounting models got screwed. It was pricing those Xboxes
like as if they were selling millions more than actually got sold by the
end.
Maybe MSFT should've stuck to the original design specs?
Yousuf Khan