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News source: In-House

NVIDIA's major rival in the PC space, ATI, recently won the contract to create the graphics chipset for the successor to Microsoft's Xbox - no surprise to those who have been following the internal tensions in the relationship between Microsoft and NVIDIA over the current Xbox contract, but rumours suggest that the final stumbling block may have been a refusal by NVIDIA to hand over manufacturing permissions for the chipset to Microsoft rather than creating and supplying all of the components itself. Given Sony's track record, it seems highly unlikely that it would accept anything less than this from a technology partner - so even ignoring the technology hurdles, a deal seems highly unlikely.

However, our source could not rule out the possibility of discussions between Sony and NVIDIA. "I'd expect that Sony talk to a lot of people," he commented. "In a business like that you always explore all the options, but it would take a hell of a pitch to change minds at Sony about internally developing the GPU, and NVIDIA just don't have that pitch. People hear a whisper that someone from NVIDIA is talking to someone from Sony and bang, you have a massive rumour, but it really doesn't mean anything - people from these companies talk all the time."