Sony Planning to Not Lose Money with New PlayStation 4

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Not sure how I feel about this. In previous generations, part of the whole console business model was to release fancy hardware and subsidize it, making up money through game sales. If they don't plan on losing money on their consoles, what does that mean for the relative quality of the hardware in the console? Nintendo made money on each Wii sold and, simply put, the hardware itself was garbage.
 
It is very simple. They will base it around the price of Microsoft's new console, while factoring in the cost of developing and manufacturing the system.
 
Since they are just throwing PC hardware into a console it's not inconceivable to think they can keep costs down with this generation of consoles (sightly customized but it's an AMD off the shelf CPU/GPU at it's core).
 
Two things; first, I think there is very clever parsing of words here. The CFO specifically says not a "major" loss. That means there is possibly still some kind of loss. Remember, the PS3 sold for $600 new at launch, and even at $500 it was still costing Sony money on each console. That means that cost was very, very high relative to the sale price. Even so, they are using relatively new technology in the PS4, so they will have some extra costs of R&D compared to using an off-the-shelf AMD A10 and Radeon HD 7xxx. They likely aren't going to sell the console at cost, trying to net some of the cost/gain profit while leaving room to drop prices later as cost of production comes down.
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?
 


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?
 
SONY has been going through a major management change for the last couple years. They are focusing in what they do well (Digital imaging, consoles and mobiles) to try and get back into the game. They were fighting too many fronts and losing on most of them.
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.
 
@stevejnb, it means they didnt invest too much into making the ps4 apu. most of the investment was made by AMD who created and developed the apu with their own existing tech. amd made the apu to sonys specs and sony incorporated whatever propietary stuff they needed into it. compared to the investment in the cell processor(which was quite the accomplishment) this apu investment is not much. the ps4 hardware is also cheaper to make due to the nature of the apu. all this translates into a much better profit margin than the negative ??% the ps3 had.
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.
 
In how I understood it, the CFO was saying that Sony's R&D costs were less "major" with the PS4's development, so that the initial hit from investment costs are going to be less sever for the company.
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.
 
At release the PS3 was actually $599 USD for the high end (60GB) model. I know because I bought one at that price.
 
Stand-alone bluray players were more expensive than the PS3 at the time of it's release. Now you can find a decent one for $60, I'm guessing Sony will save tons there too.
 
Missing the point you are.
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.
 
Translation we will dumb down the PS4 and cut corners to save money with 18 month old pc hardware thrown in with cheap black plastic case to mold around it and hope it will sell millions. I'll stick with my current gen PC gaming rig that already outshines the "next gen consoles" thanks.
 
@stevejnb, your mixing some things that dont necessarily relate to each other. the fact that they are using pc components, not investing a whole lot in R&D, and making a gain doesnt mean at all that it will be bad or cheaped out. it means they are using already available tech and improving upon it. the apu itself from 1 supplier is already MUCH cheaper to make than a cpu and gpu from different suppliers. the savings and benefits are outrageous when compared to the ps3 disaster.
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.
 
I'd be really interested to know how a company that's been on a downward spiral and selling off their facilities for years intends to "turn a profit". We can't say a price point or exact hardware cost yet, but the hardware inside would still retail for over $600 at the very least and likely far more if I'm to believe the devs oohing and ahhing over it's APU power. It would be foolish to sell it for anything above $500 in this economy. Part of the reason PS3 slid by with a high price is because it introduced a BR drive, which cost as much as the console itself at that point. Even making it up in software, they're doing what seems to be a heavy indie push and waving the usual fees for PS Mobile. Considering their electronics arm has plummeted as well they no longer have the financial backing they once had to take risks. Something seems fishy with the PS4 between quality and price, but of course Sony has never lied before, right? Oh, wait....
 
It may be difficult to keep the price competitive against PC's and the Steambox if they're planning to not lose money. Of course they don't have an expensive Cell processor or Blu-ray player this time, the APU is pretty much a customized off the shelf AMD APU and blu-ray drives are like $30 instead of several hundred like they were in 2006 when the PS3 launched. I'm sure they'd be making money if they sold it at $500 again. The question is, where can they price it at where they'll at least break even, yet still be comptetitive against PC's, the Next Xbox, and the Steambox? I think they need to keep it at $400 or less, can they at least break even at that price point? You could build a PC with equivalent specs for $600, maybe less if you buy your parts during this year's Black Friday sales. The Next Xbox has had rumors placing it between $300-500.
 
The cost to develop the Cell chip in house was insane.
The PS3 just didn't have enough RAM, and devs claimed it was a real bitch to code. And Sony removed the Install Other OS feature, and PS2 compatibilty - all of which is really unfortunate, as I believe the PS3 could have been a truly killer console.
 
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