Courtesy PC World...

The XBox's graphics will now be licensed to Microsoft by ATI.  Nvidia, the graphics company that previously worked with the XBox, has backed out, claiming that it needs to cut business costs.  Rumors have also said that Microsoft was looking for another graphics company in the first place.  Also, according to the article, it doesn't sound like Nvidia could have been very pleased with Microsoft, since "Nvidia was also left with a sizable amount of unusable inventory after Microsoft changed the security settings for the XBox, forcing Nvidia to absorb that cost."

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From the looks of things, it doesn't sound like this was a partnership made to last.  Both companies got a little greedy, and now it's biting both of them in the butts.  They couldn't agree on prices and had to have mediators come in to solve the problems with them.  Hopefully (for Microsoft), the partnership with ATI will be much more successful.

Unfortunately for Nvidia, this brings them out of the gaming market almost completely, and for ATI, it means they're now dealing with both Nintendo AND Microsoft.  ATI stock is bound to jump after this.



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