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IBM, Nintendo Team on Game Player

May 12, 1999

NEW YORK (AP) _ IBM Corp. will supply the processor for Nintendo’s next-generation video game system, enabling the device to display more lifelike images.

Nintendo Co. disclosed those plans today in Tokyo as it announced it will be developing its next game console in partnership with Japan’s Matsushita Electric Industrial Co.

Under the alliance, Matsushita will provide digital video disc drives for the new Nintendo game machine, which will go on sale worldwide at the end of 2000.

IBM will make a custom computer chip for the new console based on its PowerPC processor. That will allow the machine to display more lifelike images than the Nintendo 64 system now on the market.

The pact between IBM and Nintendo is worth about $1 billion, a source familiar with the deal told The Associated Press today.

The combination of IBM and Nintendo follows similar linkups by fellow Japanese giants Sony Corp. _ with Toshiba Corp. _ and Sega Enterprises Ltd. _ with Microsoft Corp. _ as the companies vie for a piece of the $6 billion game market.

The next generation of game machines is expected to take on a wide variety of computing tasks, including Internet linkups, music and video entertainment.

Sega Enterprises will release its next-generation Dreamcast, in the United States in September, while Sony is expected to release its PlayStation II in Japan this year and in the United States by Christmas 2000.

Sony currently accounts for about 60 percent of the U.S. market for video game machines with its PlayStation system, while Nintendo holds more than 30 percent; Sega has less than 5 percent.

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