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ssj12 said:

why would they not use a next generation PPC processor from IBM? It breaks tradition.


I don't know how well the newest Power PC processors compare, but previous versions of the Power PC core were not particularly competitive in terms of performance for the energy consumption or cost. With how low performance the Wii was, it should be (reasonably) easy to maintain backwards compatibility through emulation of the system, which enables Nintendo to choose technology partners that make the most sense for them.

Beyond that, Nintendo has tended to work with both smaller technology partners (ArtX, Mosys, Factor 5) as well as larger companies to get the hardware they think will meet their needs.

Finally, few games are (really) CPU bound anymore and Nintendo could be designing their system with this in mind. Besides advanced physics the CPU of both the XBox 360 and PS3 are entirely adequate for most games today; and the nature of physics simulations makes them better suited to be executed on a GPU or on a stand alone PPU rather than on a CPU.