Long before Nvidia became one of the biggest winners of the AI era, the company had already found an early and very tangible springboard. The original Xbox was not only central to Microsoft’s console ambitions, it also gave Nvidia a major push when Bill Gates’s company chose Jensen Huang’s firm to supply its graphics technology.

Before conquering Wall Street with artificial intelligence, Nvidia found its way into living rooms when Microsoft picked it to build the graphics chip for the first Xbox. In the early life of the console, Microsoft wanted a machine with unmistakable PC DNA, so Nvidia became one of the core pillars of an architecture that mixed a Pentium III processor, a hard drive, Ethernet, and a custom 3D GPU tied to Jensen Huang’s company.

Back in 2001, Microsoft boasted that Nvidia’s GPU gave the Xbox three times the graphical power of the other major consoles of the era, namely the PlayStation 2, the GameCube, and the Dreamcast. To make sure the project stayed viable, Microsoft advanced roughly 173.5 million euros to Nvidia in April 2000. For a company that was dramatically smaller than the Nvidia we know today, that was a massive injection of support from Bill Gates’s side.

For a While, Xbox Became a Serious Lifeline for Nvidia

The plan quickly started paying off for both sides. Nvidia itself admitted that the rise in Xbox shipments drove a meaningful part of its growth between 2002 and 2003. The dependence became hard to ignore: the Xbox business accounted for 9% of Nvidia’s revenue in 2002, 23% in 2003, and still 15% in 2004. At that point, this was no minor console side project. It was a line of business that had a very real impact on Nvidia’s finances.

Microsoft felt the effect too. The company attributed roughly 1.171 billion euros in revenue to the Xbox debut in its 2002 fiscal year. But the bigger story goes beyond raw money. What really happened here is that Nvidia used the first Xbox to establish itself as a serious player in the console space. And it did so through the original Xbox, a system that went on to sell more than 24 million units worldwide.

The Marriage Eventually Ended Badly

The partnership did not stay harmonious forever. When Microsoft and Nvidia clashed over chip pricing, the dispute ended up in arbitration and was eventually settled through future price reductions. Even so, that was the first clear sign that the two companies were heading toward a split. In 2003, the same year that 23% of Nvidia’s revenue still depended on Xbox, Microsoft confirmed that it would not use Nvidia for the next Xbox.

That closed an important chapter for Nvidia, even if both sides continued working together while the original Xbox remained in production. The broader takeaway is hard to miss: the first Xbox did not just try to disrupt Sony’s console dominance, it also gave Nvidia a major early boost that helped shape the company’s path long before AI turned it into a market monster.

Source: 3DJuegos