Speaking at the Design Automation Conference, Lewis said Microsoft tried to save a few million dollars by designing the Xbox 360's GPU in-house, rather than farming the design out to an experienced, approved application-specific integrated circuit vendor. Lewis chalked the high failure rate to Microsoft's inexperience designing such chips. "How many ASICs per year does Microsoft design? Not many.," Lewis said. "The ASIC vendor could have been able to design a graphics processor that dissipates much less power."
The irony is that Microsoft is widely believed to have gone to experienced ASIC-designer ATI for a redesigned Xbox 360 graphics chip in the middle of 2007. So, in addition to spending over a billion dollars on a warranty extension, Microsoft probably still ended up having to spend the few million dollars they were trying to avoid in the first place. Smooth move, ex-lax.