Internet gaming site Spong.com has claimed its recent story ATI will provide the chipset and graphics technology for the Xbox 2 has been confirmed by an unnamed "senior source close to Nvidia". According to Spong.com's source, "[Nvidia] didn't want to meet Microsoft's demands for the floating design of Xbox Next. It didn't make sense to partner on the project. At this moment in time, ATI is working with Microsoft."

Assuming the source knows what he or she is talking about, the comment suggests that Microsoft did offer the project to Nvidia. After the battle between the two companies over how much money Microsoft should pay Nvidia for the original Xbox graphics and chipset technology, it was widely supposed at the time of Spong.com's first ATI/Xbox 2 story that the software giant was simply pissed off with Nvidia. But it's clear that sound business minds prevailed, and the longer-term benefits of working with an existing partner outweighed more momentary emotional considerations. Nvidia, however, doesn't seem to have been willing to be flexible, and now its arch-rival has the deal - if the source's comments are accurate.