Microsoft Corporation will pay PC video card maker nVidia a $200 million advance for its work on the X-Box gaming system, which will ship late next year. The up-front payment will help fund nVidia's development of the high-end 3D graphics chipset that will power the X-Box; the companies report that it will be capable of over one trillion operations per second, well above the capabilities of any currently shipping consumer-grade 3D chipsets. For gamers, the X-Box represents the console "Holy Grail," with its high-end Pentium III microprocessor, 8GB hard drive, and Windows 2000-based operating system. But it is the 3D chipset at the heart of the X-Box that most sets it apart from its competition at Sony, Nintendo, and Sega.

"The digital revolution is driving massive change in consumer electronics, says nVidia CEO Jen Hsun Huang. "At the epicenter of this revolution will be next-generation game consoles like X-Box: it is incredibly powerful, networked to the Internet, and will deliver breathtaking games. And as 3D is a key component of X-Box, nVidia will be launched onto the world stage as we work with Microsoft to transform the living room experience. This opportunity will catapult us into the game console games arena."

Currently, nVidia ships a variety of popular, leading-edge 3D gaming hardware for the PC market, such as the GeForce 256, RIVA TNT2, and Aladdin TNT2. The X-Box will be nVidia's first foray into the gaming console market