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Microsoft torpedoes third-party Xbox 360 reports

Software giant denies reports that external manufacturers will license its next-gen console OS any time soon.

The next-gen console race took an unexpected twist this week when an article in Japanese business daily Nihon Keizai Shimbun was picked up by many media outlets.

The article reported Bill Gates, who was visiting Japan, as hinting that Microsoft might adapt its mega-successful PC business model to the next-gen console race. The paper quoted the Microsoft chairman and chief software architect as saying his company was open to the idea of licensing the Xbox 360's operating system to third-party hardware manufacturers, as it does with Windows and PCs. Gates reportedly said such a business strategy is being discussed within Microsoft, and that the idea is at a preliminary stage.

Gates' comments were reportedly in response to queries about third-party premium-end game machines with functionalities beyond the standard Xbox 360 specifications. However, rumours began to quickly spread that Microsoft was considering letting outside parties make their own game consoles that would run the Xbox 360 OS, perhaps as soon as the platform's launch later this year.

However, speaking to CNET.com.au sister site GameSpot.com, Microsoft officials flatly denied that the Xbox 360 would carry any other label than Microsoft's -- or at least any time soon. "To be clear, Xbox will continue to be manufactured exclusively by Microsoft," said a rep for the company. "There's certainly a potential for other hardware companies to manufacture Xbox some day in the future, but that is not something we're focused on right now."

Of course, at the current time, there would be little incentive for an external manufacturer to make an Xbox 360. While Microsoft has released no official manufacturing costs -- or even a price -- for the console, it is widely believed that the company is heavily marking down each unit. Some analysts predict that the company will lose around US$75 (AU$98.75)for each 360 sold, losing US$91.2 million (AU$120 million) and US$243.2 (AU$320 million) million in hardware production in 2005 and 2006, respectively.

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