Microsoft Looks to Design Next Xbox Chip?

The New York Times reports that Microsoft is setting up its own research labs, with an eye toward designing the chip to drive the next Xbox game console.

The New York Times‘ John Markoff reports (subscription required) that Microsoft has quietly created a new Computer Architecture Group to explore new ideas in system design and processor integration. The idea is to let the Redmond software giant respond more quickly to market forces by having a bigger hand in the way systems are designed and implemented, without having to wait for vendors like Intel, AMD, and IBM to supply them with finished chips. Two possible targets of Microsoft’s hardware research efforts: voice recognition and the design of the next version of the company’s Xbox gaming console.

The lab will be split between Silicon Valley and the company’s Redmond home campus, with the California contingent headed up by Xerox PARC veteran Charles Thacker, 63, who came to Microsoft in 1999 by way of the now defunkt Digital Equipment Corporation. Thacker helped design Microsoft’s Tablet PC, and had a hand in engineering the Xbox 360; he also helped create the Xerox Alto (regarded by many as the first workable personal computer) as well as Ethernet LAN technology.

Significant resources in chip and systems design could benefit Microsoft in the marketplace by giving it increased control over both the hardware and software sides of product development—a methodology which has served Apple well for decades, and which Microsoft has applied to both its Xbox and forthcoming Zune product lines. However, tightly-integrated systems don’t necessarily attract strong third-party development, and, in Microsoft’s case, may run the company into more murky water with antitrust regulators in the U.S. and internationally.