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The 65nm chipset will be smaller, more reliable and cheaper to produce.
However, it must be noted that the smaller chipset will probably be put inside the same 360 case, so we won't see any benefit on that front. Also, "cheaper to produce" doesn't automatically translate to "cheaper for the consumer". More likely it will translate to "profit for MS to offset the $1 billion that they are going to lose on warranties forthe previous flawed version", at least for a while.
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