ATI now powers current XBOX 360 graphics with a Xenos chip so it makes sense that Microsoft would stay with ATI for its next generation console.  ATI merged with Advanced Micro Devices (AMD) a chip maker based in California in 2006.  Fudzilla reports that Microsoft was all too happy to get contract negotiations started as soon as possible.

Reasons for Microsoft’s eagerness may be they hold backwards compatibility for its games as a priority unlike other console makers.  Microsoft has a lot riding on its down-loadable games “on demand” content service  and doesn’t want to piss off its large XBOX LIVE user base.

Staying with chip maker ATI overcomes large hurdles for backwards compatibility says Techdirt, and speculation as to what the next gen XBOX will be named the XBOX 720 or XBOX 1080 is swirling the net.  Reports are that Microsoft will probably announce the next console sometime in 2010.  We won’t get our hands on the console that early, probably the new mystery machine will be delivered in 2012.

For you tech geeks, Fudzilla is reporting that given the amount of lead time the new graphics processor may be a 28-nanometer chip.  Ahhh, take that in Techies!  Be careful when crossing the street and watch out for buses or you might miss the next console.