NAG Online > News > Rumor: AMD and Xbox One deal is worth over $3 billion

Rumor: AMD and Xbox One deal is worth over $3 billion

The Xbox One is Microsoft’s new baby. We’ve seen that its going to be the darling of their marketing department for the next few years and together with the lower development costs and higher performance, its guaranteed to earn Microsoft piles of money. In fact, the company is so confident about its position in the next-gen market that it predicts sales of over 400 million units in the next five years. That means a lot of money will be trading hands and the winner at the end of it all is you – the gamer – and AMD. Rumors on the internet point to a LinkedIn profile of a former AMD executive who values the Xbox One deal at more than $3 billion.

xbox one header

Hit the jump for more info.

One of AMD’s ex-employees who ended up at Nvidia (aside from Jen-Hsun Huang), Bob Feldstein, recently updated his LinkedIn page to add in information pertaining to his role in the console deals and how much they were worth. Feldstein notes that the chips are completely custom and arranged differently for each unit (as I already covered in, Microsoft’s Xbox One has less powerful hardware) and also revealed how much the deal was worth to AMD – a staggering US $3 billion. And that’s apparently a conservative estimate.

It is rather good news for the ailing company. If the Xbox One is bringing in revenue of $3 billion over the course of the console’s natural life and we assume the PS4 deal is worth the same, that means that AMD is bringing in $6 billion in revenue over the next five or so years. This is aside from the $4 billion in turnover they already make from sales of their desktop and laptop hardware as well as the chips they’re making for the Xbox 360, the Wii and Wii U.

How much profit its bringing into the company is still unknown. In January this year AMD’s financial year statements were revealed and it turns out the company made a total of $5.42 billion in revenue for their fiscal 2012 year, but they lost $1.06 billion. Net income from that year was $1.18 billion so while they’re turning in a profit, its still not enough to return them back to the levels the company enjoyed in 2006. Penalty fines for slowing down production at Global Foundries and selling some of their business assets also made for some erratic quarterly results.

Xbox One in detail

Microsoft’s Xbox one, powered by AMD. Just look at how small that chip is!

But all this will change very soon. See, most of the R&D is paid for and AMD is already selling chips based on the same technologies they built to fit into the consoles. The HD7790 is the desktop version of the GPU appearing in the Xbox One and PS4 and the Jaguar processors already appear in Temash and Kabini APU families, due for a launch at Computex next week. AMD can earn revenue in so many different ways and in the end, these may be the most profitable products they’ve ever made.

And over the next six or so years, extra revenue per year of $1 billion is nothing to sneeze at. We still have to see if the quoted figure was actually for a period longer than a year or if it’s purely profit. Intel still earns ten times more revenue than AMD, but its surprising how the underdog is pulling through its woes. By this time next year, it may even be completely profitable again.

Source: Tom’s Hardware
Discuss this in the forums: Linky
Tags:  , , , ,
  • http://www.facebook.com/wayne.voss Wayne Voss

    They better have a good e3 with great line ups and convince me to buy it, because right now i am considering changing to the ps4. I dont want to even see or hear about the casual gamer. I want them to concentrate on the actual gamers like you and me.

    • http://www.facebook.com/alex.rowley.549 Alex Rowley

      That’s what Microsoft seems to have forgotten. When a console first launches only the die hard fans who have got an actual library of games are going to buy it. The so called casual market won’t pick it up day one unless it’s damn cheap. I know people who don’t even know the new Xbox was announced before I told them about it.

      • http://www.facebook.com/pages/Wesley-Fick/184346154999538 Wesley Fick

        “The so called casual market won’t pick it up day one unless it’s damn cheap.”

        Exactly the reason why so many people flocked to buy the Wii U on the fire sale.

Advertisement

Advertisement

Login / Search

Latest games

Latest opinions

Advertisement

Related posts

Advertisement