New XBox with 3x PPC G5

[minator]

Actually according to the rumour they are 3 dual core G6 processors and each can do 2 threads (so 12 in total).
The ATI chip is NOT the one due soon (R420), it's at least a generation ahead (R500).

How would 3 G5 be cheaper than one X86 chip?

Because they won't be high end CPUs, Apple will have those - The G6 is long romoured to appear later this year  so Apple may even be onto the G7 by then.

Lower clocked processors cost a lot less money than high clocked processors (especially in the volumes we're talking about) and possibly more importantly run cooler - do you really want a 140 Watt beast in your X-Box?  That's what Intel are predicting.

They also can take over tasks like sound and I/O, it's probably cheaper and quicker (to market) to use 3 CPUs than use custom chips.

In any case the PS3 is still likely to stomp all over it...

[minator]

The price of the G5 processor is already as cheap as can be.

Building chips is a very, very expensive involving $2 Billion on a Fab (Chip Factory), development of the process technology, development of the chips and probably a lot more besides.

The cost of materials used is a pittance compared to this.

The more you make the wider you can spread these costs, so the more you make the cheaper they get.  The G5 isn't being produced in huge numbers yet, probably less than 1% of the x86 market at the moment.

Those prices have a long way to fall yet...