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Future Xbox gaming consoles released by Microsoft will use processor technology from IBM, the companies said Monday in what represents a significant design win for IBM over current Xbox chip provider Intel.

Microsoft and IBM did not release many details, but said that Microsoft has agreed to license IBM processor technology for future versions of the Xbox console, as well as services based around that console. An IBM spokesperson declined to comment on a time frame for the new devices.

A Microsoft spokesperson was not immediately available for comment.

Gaming Market

When the future Xbox console is released, IBM's chip technology will have been adopted by the three major gaming console vendors.

Sony, Toshiba, and IBM are working together on the Cell project, which is expected to provide the processing technology for the next generation of the Playstation console.

IBM also provides chip technology for Nintendo's GameCube device, the IBM spokesperson said.

Suffering a Setback

"It's a major blow for the Intel Architecture moving forward for gaming entertainment," said Richard Doherty, research director at The Envisioneering Group in Seaford, New York. Intel's revenue from Xbox chips was not substantial, relatively speaking, but the shift from Intel to IBM is a big loss politically, he said.

Companies that have traditionally focused on building PCs for corporate customers are shifting their attention to the world of consumer electronics, and the lack of Intel technology within the fast-growing market for gaming consoles leaves a gap in the company's drive to dominate the digital home, Doherty said.

IBM recently filed plans with local authorities to expand its chip manufacturing facility in East Fishkill, New York, and will probably use some of that new capacity to make the chips for Microsoft, Doherty said. The IBM spokesperson declined to comment on whether the company would manufacture chips for Microsoft.