Xbox 360 Design and Production

For the Xbox 360, Microsoft planned to use its existing EMS suppliers, Flextronics and Wistron, to provide the initial production requirements. A third EMS, Celestica, was scheduled to begin production in early 2006 from a new facility in China.30

Microsoft applied a number of lessons learned from the original Xbox when designing the Xbox 360. The original product, designed in-house, had been criticized for its poor appearance and large controller, factors that hurt sales, particularly in Japan. For the Xbox 360, it outsourced design to Astro Studios in San Francisco, which developed a small, elegant machine.31

Microsoft contracted with chip companies so that it owned the designs of the critical Xbox 360 chips, and would be able to go to any contract chip manufacturer in order to continually reduce costs. Intel and Nvidia, the suppliers of the processor and graphics chips used in the initial Xbox, resisted this approach. Microsoft signed up IBM to design the processor chip, with IBM developing a three-core chip by the December 2004 deadline. ATI designed a unique graphics chip, also completing the task by the end of 2004.32

The overall product design, incorporating more than 1,000 parts, was primarily done by the engineering team that Microsoft had acquired when it purchased WebTV in 1997, which had extensive experience in console design. Microsoft also brought its existing Xbox manufacturers, Flextronics and Wistron, into the design process so that they could design production to be optimized for the Xbox 360. Xbox 360 production was anticipated to involve more than 10,000 workers in China. Once produced, the products would be transported by ship to North America, Europe, and Japan.33