Sources close to Bloomberg report that Microsoft has signed a deal with Advanced Micro Devices to manufacturer processors for its yet to be named, next-generation Xbox "720" console. This confirms previous rumors of an AMD-made "Jaguar" APU which would purportedly ship inside the Xbox 360's successor.
Microsoft's move to AMD's more general-purpose x64 "PC" architecture indicates that existing Xbox 360 games will not be compatible with its next-generation console. The Xbox 360 is fueled by a 64-bit Power PC chip designed by IBM.
One of the reasons cited for the major platform shift to AMD is developers; Microsoft says game studios will have an easier time developing cross-platform games for its Xbox 720 once the switch is made.
It appears AMD has cornered the console gaming market, finding its way into the biggest-name consoles. The Playstation 4 is slated to house an AMD processor while the Wii U pairs an AMD Radeon GPU with an IBM-made processor. Even Valve's upcoming Steambox is expected to feature an AMD APU.
AMD stated last year that it would be focusing less on desktop CPUs and more on its APU offerings. The company's recent console pair-ups ostensibly fit into this strategy, allowing AMD to thrive outside the PC market with its integrated solutions.
Investors certainly favored the news: AMD shares rose by 13 percent.
Additionally, Microsoft is planning a May 21 event although Bloomberg's sources note they don't expect Redmond's next-gen console to launch until this summer.