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Targeting Consoles

Microsoft, based in Redmond, Washington, decided against an April event because it saw little competitive pressure from Sony, which plans to release the Playstation 4 in time for the Christmas holidays, said two people.

At Sony's February unveiling of the Playstation 4, the Tokyo-based company demonstrated the controller and gamę play running on prototype hardware, without showing the machinę. Critics including Amir Anvarzadeh, a Singapore-based manager for Asia equity sales at BGC Partners Inc., panned the lack of any Tevolutionary" advances and the PS4's emphasis on social- gaming features.

Nintendo Co. (7974Vs Wii U, another competitor, has been selling below the company’s initial forecasts sińce November. In January, the company said it expected to sell 4 million units in the year ending March 31, down from a previous Outlook for 5.5 million.

For AMD, providing chips for gamę consoles is part of Chief Executive Officer Rory Read’s plan to lessen the company’s dependence on the declining personal Computer market. Read is aiming to get morę than 20 percent of the AMD's revenue from areas other than PCs by the fourth quarter.

Sales Drop

Traditional console makers face competition from cheaper machines like Ouya lnc.'s, and changes in gamę play that favor inexpensive titles for mobile devices such as Apple Inc. (AAPL)iPads and Samsung's Galaxy Tab

U.S. retail sales of packaged video games fell 21 percent last year to $8.9 billion, according to researcher NPD Group, while revenue from games downloaded to computers and mobile devices rosę 16 percent to $5.9 billion. Globally, the market including hardware and accessories was $67 billion.

The decision to switch to mainstream PC processors also will make games developed on previous generation consoles incompatible with the new systems, Envisioneering's Doherty said. Sony has said it hopes to deliver some older games over the Web, using its Gaikai cloud gaming service.

In addition to the main Power PC processor, the current Xbox 360 contains a graphics chip madę by a unit of AMD. The Playstation 3 uses a custom Celi processor and graphics chips from Nvidia Corp. (NVDA)

Cost Savings

The x86 technology licensed bv Intel Corp. (INTC1- the so-called instruction set fundamental to all modern personal computers - gives the new Xbox access to existing design elements, making the machine's chip system cheaper to develop. The new also chips offer morę computing power than parts Microsoft is currently using. Apple Inc. dropped the Power PC design from its Mac computers in 2005.