Microsoft Might Buy AMD (And What That (In Theory) Means For You)

Reports and rumours are flying about that Microsoft could be planning to acquire computer processor developer Advanced Micro Devices, Inc., or “AMD”.

You’re likely to respond to this news in one of two ways: either you’ll be intrigued by the prospect of these business machinations, or you’ll shrug your shoulders and wonder what it’s got to do with anything. To the latter we say it’s got to do with everything, and to the former we say read on. (Actually we say that to the latter, too.)

AMD are the producers of the Jaguar-architecture Accelerated Processing Unit (APU) – a form of a system on a chip (SoC) – a microprocessor that’s designed as a central processing unit (CPU) and graphics processing unit (GPU) all in one. To clarify, a CPU is effectively the brains of a computer or console where the calculations take place and commands are issued, while the GPU creates lighting effects and transforms objects every time a 3D scene is redrawn, basically creating the image you see on a monitor or television. The CPU could perform the GPU’s task however it’s an intensive workload, and by separating the two the CPU is free to either do more or perform quicker.

Xbox One’s SoC.

AMD also manufacturer other components which may be of interest for Microsoft to own out-right, such as motherboard chipsets and embedded processors, that are key for servers, workstations and personal computers, as well as embedded systems applications. They’re the second-largest global supplier of microprocessors based on the x86 architecture, one of the largest suppliers of graphics processing units, and the only significant rival to Intel in the x86 based personal computer CPU market.

This relates to video games and consoles because AMD’s Jaguar chip is not only a key component in every Xbox One, it’s also used in every PlayStation 4. This means that, if Microsoft were to buy AMD, Sony would either have to pay Microsoft for every PlayStation they sell or design their own APU/SoC from scratch to replace the Jaguar.

Superficially, this seems like a sly but shrewd business decision: although sales of the Xbox One have increased since Microsoft lowered the R.R.P the company is still far behind Sony in terms of actual units bought, and capitalising upon their competitor’s success is an obvious decision.REDMOND, WASHINGTON - JULY 17: The Visitor's Center at Microsoft Headquarters campus is pictured July 17, 2014 in Redmond, Washington. Microsoft CEO Satya Nadella announced, July 17, that Microsoft will cut 18,000 jobs, the largest layoff in the company's history. (Stephen Brashear/Getty Images)

It’s win-win for Microsoft then, right? Well, there’s a catch or two (bet you saw that coming, though). For starters, the source of this latest buy-out speculation is one simply referred to as ‘familiar with the matter‘. Apparently, Microsoft reached out to AMD several months ago yet the results of the talks is still ‘unclear’. Rumours about company acquisitions are quite common, too, and after analysis there are convincing arguments as to why Microsoft wouldn’t want to purchase AMD.

If Microsoft actually are planning on buying AMD though, what does that mean for Xbox? Analysts have estimated Microsoft pays $100 to AMD for every Xbox One APU/SoC, and with lifetime sales of the Xbox One now currently around the 12.6 million units mark that’s a total cost of $1.26 billion for chips alone. The acquisition would lead to a saving of a billion dollars a year, a sum that could go back into console development and allow the Xbox brand to improve console performance. Add in the revenue from Sony’s PlayStation 4 and from the perspective of someone who enjoys video games you hope the extra intake will mean better things for those who like games on Xbox. So that, in theory, is what it means for you.

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