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Microsoft to Use Advanced Micro Devices Chips For its New Xbox Console (AMD, MSFT)

Shares of Advanced Micro Devices Inc. (NYSE: AMD) leaped about 13% on Monday after Bloomberg reported that the software giant, Microsoft Corp. (NASDAQ: MSFT) will be using AMD processors for its upcoming Xbox, videogame console as it looks to slash expenses for making machines and entice developers to roll out more game titles.

The announcement from Microsoft could not have at any better time for Advanced Micro Devices. AMD, which is also supplying chipsets for the soon to be launched PlayStation 4 of Sony is eyeing to grab the bigger chunk of the global video game market, estimated at $67 billion. The Company is shifting its focus towards the videogame market since it wants to lower its dependence on the PC industry. Global sales of PCs and laptops have been consistently declining in the recent past as more and more users prefer touch phones and tablets.

Meanwhile, Richard Doherty, President of Envisioneering Group a technology consulting firm said that he anticipates several new game titles will hit the market following the launch of Xbox as publishers were reluctant to launch new titles as they had to reinvent many features using consoles. With Xbox, game developers will not have to reinvent features. In addition, it will also offer them to create titles just the once.

“We’ll probably see many more titles because the console makers are saying the publishers are back in the driver’s seat,” said Richard Doherty, according to Bloomberg news.

Doherty said that publishers of games titles often whined that present consoles were not cost efficient since it involved lots development costs due to steep learning curve. Now, Doherty thinks that game developers will be able save lots of money with new chipsets.

Microsoft is also contemplating to unveil its plans of launching its new Xbox during the E3 expo in June. However, the Company has not provided any specifications of Xbox.


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