October 23, 2006

Microsoft to get into chip designing business..

John Markoff, New York Times scored a great scoop with his story on Microsoft's new in-house chip design team, tentatively called the Computer Architecture Group. Microsoft has always had plenty of internal hardware expertise, but a dedicated chip design group takes things up a notch. Markoff mentions that the team will be thinking about the sequel to the Xbox 360, and they'll also be looking at other consumer electronics devices in Microsoft's ever-expanding portfolio of gadgets.

So does this mean that Microsoft will eventually compete directly with Intel, or even that they'll be less dependent on Intel processors now that they can design their own chips? Not necessarily.

As parts of the article suggest, this move is more about the industry's shift to multicore than it is about any kind of brewing Microsoft vs. Intel friction. It's also probably almost as much about Microsoft's high-end server plans as it is about their consumer electronics business. Furthermore, what all three of these elements—the multicore shift, game consoles, and high end servers—have in common is that they're all connected to a larger, cyclical phenomenon in the computing industry: the return of the "whole widget" maker.