The Curse of the Xbox?

ATI just reported lower-than-expected quarterly earnings, and CEO and President Dave Orton admitted that his company was struggling with latest-generation (90 nm) process yields and, consequently, that ATI's latest-generation GPU architecture was running about six months behind schedule (rumour suggests it'll be released in about a month). Nvidia, conversely, bases its leading-edge chips on the less aggressive 0.11 micron process; it smoothly launched and ramped its latest-generation GPUs into production in June. Lessee….where have I heard this song below?

Ah yes. It was around three years ago. Nvidia was struggling with yields on its GeForce FX 5000-series GPUs, based on the then leading-edge 0.13 micron copper-enhanced process. ATI, conversely, took the more conservative tack, manufacturing its Radeon 9700 on an aluminum-based 0.15 micron process. ATI took the leadership crown from Nvidia three years back, after several prior years spent playing second fiddle, and the race has been nip-and-tuck ever since. Until now, that is.

You might simply chalk this up to a case study in 'those who cannot remember the past are condemned to repeat it'. But there's something else connecting Nvidia and ATI. Three years ago, Nvidia was the graphics core in Microsoft's Xbox game console. This year, ATI is the graphics core in Microsoft's Xbox 360. Has the allure (and energy drain) of the game console distraction, in both cases, caused the graphics company to take its eye off the ball, with disastrous consequences?