Xenon [Xbox2] is powered by a 3.5+ GHz IBM PowerPC processor and a 500+ MHz ATI graphics processor. Xenon has 256+ MB of unified memory. Xenon runs a custom operating system based on Microsoft® Windows NT®, similar to the Xbox operating system. The graphics interface is a superset of Microsoft® Direct3D® version 9.0.

CPU
The Xenon CPU is a custom processor based on PowerPC technology. The CPU includes three independent processors (cores) on a single die. Each core runs at 3.5+ GHz. The Xenon CPU can issue two instructions per clock cycle per core. At peak performance, Xenon can issue 21 billion instructions per second.
The Xenon CPU was designed by IBM in close consultation with the Xbox team, leading to a number of revolutionary additions, including a dot product instruction for extremely fast vector math and custom security features built directly into the silicon to prevent piracy and hacking.