It was customized for Microsoft in less than 24 months from the original contract.

"Working with IBM gave us the flexibility to design a processor to give game developers the kind of targeted power they need to make great games," said Todd Holmdahl, Microsoft vice president of Xbox hardware.

The original Xbox, released in the fall of 2001, used an Intel Corp. 733-megahertz Pentium III microprocessor. In 2003, Microsoft decided to switch to a different vendor for the next-generation system. The company best known for its market-dominating Windows operating system instead turned to IBM — the same company Sony worked with to jointly develop the upcoming PlayStation 3's Cell microprocessor.

But the Cell processor, which is expected to be deployed in devices beyond the PlayStation, is fundamentally different from the Xbox chip, said Ilan Spillinger, director of the IBM Design Center for Xbox 360. "We took a general purpose core ... and we implemented a few more instructions that were key for them to accomplish the performance (Microsoft) was looking for," he said.

IBM also incorporated high-speed connection between the microprocessor and the Xbox's graphics processor developed by ATI Technologies Inc. The graphics hardware can read directly from what's stored on the primary processor's onboard memory. IBM will discuss the new custom chip Tuesday at the Fall Processor Forum, which is being held this week in San Jose.

The Xbox 360 is slated to be launched in North America on Nov. 22, and the top model is expected to retail for $399.99. A scaled-back version — without a hard drive, wireless controller and other features — will cost $100 less.