Source:
Graphics chipmaker Nvidia's Q1 2005 earnings conference call.

The official story:
"We have made no announcements about discontinuation of production and continue to support the channel."--Microsoft corporate spokesperson.

What we heard:
In its call, Nvidia revealed that it will stop chip shipments to Microsoft after Q2 2005. "Microsoft has indicated they will not take any more product after Q2," said Nvidia CFO Marvin Burkett, "And more importantly, we have stopped production of the Xbox and expect to have no inventory after Q2." Since Nvidia chips are an essential component of the Xbox, such a move would portent a discontinuation of the console's production, possibly in advance of the Q4 Xbox 360 launch.

But although Microsoft reps told GameSpot that we "should not make a correlation between chip production and overall manufacturing," such a move is not implausible. Microsoft has said its new console will be backward compatible, telling GamSpot that its "goal is to have every Xbox game work on Xbox 360." Fully backward-compatible 360s would make current-generation Xboxes unnecessary without shrinking the customer base of current-gen Xbox titles due for release next year. Indeed, discontinuing the Xbox may prove a shrewd marketing move that will funnel gamers into the Xbox 360 pipeline. Michael Pachter, senior analyst at Wedbush Morgan Securities, told GameSpot, "They aren't leaving profits on the table because they're not making any money on the Xbox hardware. I think what their view is, and I'm guessing because they haven't announced it, is that if they stop making Xboxes, but you like our product, you'll buy the 360. So that will help the 360 installed base to grow more rapidly."

Bogus or not bogus?:
Nothing is official yet, but one thing is certain: the current-gen Xbox's days are numbered.