Sony Planning to Not Lose Money with New PlayStation 4
The next generation of PlayStation is due out later this year.
When the PS3 launched in 2006, the price was considerably higher than it is today. Still, despite its $499 price tag, Sony lost money on each PS3 sold, and this continued up until 2010. However, the company isn't planning on a similar scenario with the PlayStation 4.
Eurogamer cites Sony CFO Masaru Kato as saying the company is not planning a 'major loss' for the PS4. Kato elaborated that the development of the PS3 required a lot of investments in R&D. The fact that the PS4 incorporates existing technology means less of an in-house investment this time around.
"Unlike PS3, we are not planning a major loss to be incurred with the launch of PS4," he's quoted as saying. "At the time we developed PS3, we made a lot of in-house investments to develop the chip, the Cell chip. Development of the chip saw the silicon processing and all the facilities invested by us ourselves. But this time, yes we have a team working on chip development, but we already have existing technology to incorporate and also product investment and all the facilities will now be invested by our partners, other foundries, so we don't have to make all the investment in-house."
Sony showed off the PS4 for the first time a few months ago. The company held a special event in February and talked at great length about the development of the PS4. Sony said that the PS4 has been in development for five years, which is a bit surprising as the PS4 seems to be based largely around existing PC technology. The console is based on x86 architecture with 8 cores, an integrated GPU, and 8GB of shared GDDR5 RAM. The graphical portion of the APU is said to deliver almost 2 TFLOPS of performance. Still, this goes hand in hand with what Kato was saying about not sinking huge amounts of money into developing chips and silicon processing.
While Sony offered plenty of information on the hardware, the company didn't actually show us the console itself. For that, we'll have to wait until E3, which isn't too far away. We also don't have any clue about pricing, which is obviously a very important factor for both consumers and Sony's bottom line.

Two, I think it would be better to have higher hardware costs as opposed to higher software costs. Ideally hardware price would be low and games would come down in price instead of go up. But there have been some quiet rumblings that game prices would be going up this generation in part to better subsidize the consoles. I rather pay an extra $50-$100 on the console than paying an extra $5-$10 per game over the life of that console. At only 2 games a year, in five years you've spent that same $50-$100 in extra costs per game, money that could have been better spent on another game.
Two, I think it would be better to have higher hardware costs as opposed to higher software costs. Ideally hardware price would be low and games would come down in price instead of go up. But there have been some quiet rumblings that game prices would be going up this generation in part to better subsidize the consoles. I rather pay an extra $50-$100 on the console than paying an extra $5-$10 per game over the life of that console. At only 2 games a year, in five years you've spent that same $50-$100 in extra costs per game, money that could have been better spent on another game.
MS was using PC hardware the last two gens and still lost money on each console out of the gate. The model was "release a console at a loss and make it up n the games" - giving consoles fairly impressive hardware out the gate and giving devs more to play with.
If this philosophy has changed to "Save money on the hardware, release the console at a gain," does anyone lose but the customers? The Wii did exactly that last gen, sold on a novelty, and it was recognized as a technical backwater for the whole generation. Don't get me wrong, it had some great games, but it's a pity the developers didn't have more freedom with the hardware than they had with it.
I've been console gaming since the NES. PC gaming as well, but that is beside the point. If in this generation console manufacturers not only use PC hardware but also release at a gain I am *finally* forced to ask the question - why not just PC game?
Two, I think it would be better to have higher hardware costs as opposed to higher software costs. Ideally hardware price would be low and games would come down in price instead of go up. But there have been some quiet rumblings that game prices would be going up this generation in part to better subsidize the consoles. I rather pay an extra $50-$100 on the console than paying an extra $5-$10 per game over the life of that console. At only 2 games a year, in five years you've spent that same $50-$100 in extra costs per game, money that could have been better spent on another game.
Whoa, you are right. I did read the article, but more just skimmed it... That headline is outright inaccurate. The CEO does NOT say that Sony is not planning to lose money on the console, as the headline of the article suggests.
Bad journalism much Tom's? Shame to say, but I'm a perfect example of why this is bad journalism... Polarizing and inaccurate headline + just skim the article = inappropriate reaction. If the writer of the article is reading this, do you have any explanation why the headline is outright inaccurate?
I am really optimistic about this new paradigm in the company, as a long time consumer. Some improvements can already be seen, in the mobile front for instance. Older Xperia phones were laughable in comparison to Samsung, but they are catching up rather quickly. I perceive Sony's design as much bether than the competition, and they finally have decent mobile hardware too.
The console market shall not be different. They will not go for an extremely ambitious and economically risky move as they did with the PS3. The PS4 will be a simpler design with high end components (for a console, PC is not the competition here), a safer move that allows them to focus on what they are great at, which is product design.
I personally have never had an amd cpu fail on me. an old athlonx2 build I got in 2006 is still kicking it at my moms house. and my llano apu latop I got 2 years ago never really gave me any problems. so I wouldnt worry myself too much over console failure. its just my experience though, I wouldnt vouch for anyone elses experience with amd.
He didn't say anything about whether or not Sony was going to take a loss on individual PS4 hardware sales. He was talking about R&D investment costs.
Let's not take things out of context, eh?
But the PS3 used an almost completely custom CPU and Sony invested a lot in IBM to make the chips that never sold much anywhere else. So Sony ended up with the bulk of the R&D and production cost on top of having to develop Cell-specific development tools, libraries, APIs, etc. and re-train programmers to make proper use of the whole non-uniform non-standard processing monstrosity. The DMA glitch between the CPU and SPUs that severely crippled read bandwidth made an already unusual chip that much harder to deal with.
With the PS4, the CPU cores are borrowed from AMD's mobile CPU line. The GPU and DRAM controller are borrowed from desktop GPUs, glue logic between the two is borrowed from APUs, manufacturing will be outsourced to the usual suspects so all major components are practically off-the-shelf. The only PS4-specific R&D is integration of Sony's proprietary extras; everything else is stuff AMD has already been and will continue doing for themselves.
Modifying existing designs that are already designed to be scaled up/down with an existing library of support components for APUs, DRAM interfaces, DMA engines, etc. is much cheaper than doing everything almost from scratch as was the case with Sony's Cell. No need to re-invent software development tools either since most of them already exist, can be reused almost as-is and are already known by developers.
PS3 hardware doesn't cost much.
It's R&D that made it so expensive.
With AMD's APU Sony doesn't need to invest into R&D of "fancy hardware". Console hardware is nearly identical to PC's. Easier to port, easier to develop for. Good for developers, good for consumers.
consoles dont have to sell at loss to be good or anything. the wii was old tech right at launch, which provided a gain for every console sold. the ps4 is different in that its using new tech on the affordable process that is the apu. if they had gone the way of the ps3, they would have gotten to the exact spot they are in current ps4 performance, with all the problems of the cell, all the money lost in r&D, and a higher price tag.
your comment about it "using pc components, why not just pc game" is kind of off too. this may be using pc components, but its still the exact same thing as the ps3 when compared to a pc. the pc is its own thing and the console is a totally different thing with the same architecture.
xbox also did NOT use full pc hardware last 2 gens. theyve always done powerpc.