Sony showed the way by developing the CELL chip for the Sony PS3. In the typical Microsoft me to way, Microsoft has started to lay the ground work for its own chip development.
The NY Times reports that Microsoft formed the Computer Architecture Group, which is supposed to work on the next generation Xbox CPU.
Another field the new chip design group is going to be active is Voice recognition.
Intel might not be a happy about Microsoft building their own chips, but I think there is no other way for Microsoft to continue to compete with Sony in the long run.
