EE Times hyped a recent story, The truth about last year’s Xbox 360 recall, that quotes Bryan Lewis, research vice president at Gartner as indicating that the recall a year ago happened because “Microsoft wanted to avoid an ASIC vendor”.  This article points out that Microsoft elected to design the principal graphic chip on its own, rather than engage an ASIC design vendor. Lewis is further quoted that an ASIC vendor could have been able to design a graphics processor that dissipates much less power, and would have avoided this problem.

My view is that we should not rush to judgment against just Microsoft.  Putting aside the obvious temptation for an industry analyst firm to be able to tell the alleged real story, and plant advice for the rest of the industry, Microsoft is not unlike any other consumer electronics manufacturer struggling with the need to uncover value-chain cost savings opportunities while balancing critical time-to-volume demand needs.  In hindsight, it’s easy to speculate what should or could have been the options for Microsoft for getting a product into volume production to meet market needs. 

 Readers may recall that there was quite a competitive race occurring two to three years ago among Sony, Nintendo, and Microsoft to get their new gaming consoles ready for the peak 2006 – 2007 holiday seasons.  Sony suffered market setbacks regarding its choice of imbedding the new Blue Ray technology into its design, which contributed to significant delays in missing the prime market entry window because of manufacturing volume issues with key components.   Nintendo was successful in meeting the market window with a competitive price, and has had the enviable challenge of needing to constantly ramp-up supply chain volume to satisfy pent-up consumer demand.

So perhaps this story should be placed in proper context.  The race to bring a product to market in a timely fashion presents many design, volume cost, testing and other value-chain challenges.  Microsoft was not alone in making what it believed was the most appropriate decision to mitigate cost as well as meet product release windows. To its credit, Microsoft fully supported Xbox 360 consumers by absorbing all the costs for the product recall.  It is yet another learning point for a highly competitive industry that balances these decisions every week.

 Bob Ferrari