By James Brightman
Sony’s chief financial officer commented today that the company won’t be investing as heavily in its next console as it did with the prohibitively costly PlayStation 3. This is a very interesting statement to come from Sony, and it could speak to a change in philosophy towards console engineering overall. While Ken “Father of the PlayStation” Kutaragi had always wanted the best technology available for PlayStation, Sony’s business can’t afford to take massive hits in the future.
So does this mean that PS4 might be somewhat underpowered? Will Microsoft or Nintendo have the edge? IndustryGamers put the question to several analysts.
Asif Khan, Panoptic Management Consultants
I have always wondered if Sony would be able to make another console, so I guess it is good news that they are working on PS4. I am not sure that Sony is in a position to lose as much money on console system sales anymore and this undoubtedly puts Microsoft in the driver’s seat for the next console cycle as they can take a bath on systems and make it back from software sales and XBL. It could mean that Sony isn’t going to invest too much in developing from scratch by using more existing parts. For the PS3, Sony helped develop the cell processor and partially owned the cell fab factory.
Perhaps we could look at the NGP as a model for what to expect from the PS4, and if the recentrumours of the NGP RAM being cut in half are true this could support the idea that the PS4’s hardware could be less impressive than the PS3 at its launch. I think Microsoft will really be able to put the screws to Sony in the next console war, but the problem is that Microsoft has had trouble making good hardware in the past. As much as I dog Sony, they are great manufacturers.
I think the CFO is really commenting on the state of the whole company. TV, Film, and Music are all draining the cash from the good divisions like PCs and gaming. If the PS4 is just a me too system when compared to Project Cafe and the next Xbox, it could fail. Which is pretty pathetic given the huge lead they had from PS2 momentum. To me, it sounds like Sony management is capitulating and this is why I couldn’t upgrade the stock earlier this week when it hit a 52 week low (we currently rate SNE as “Don’t Buy.”) Management continues to lack any kind of vision. So yes, I think the risk of the next Xbox being better than PS4 is very high. Microsoft wants to win the next console war and it will most likely come down to them versus the Big N. XBL is a great platform and Microsoft is going to give it their all.
David Cole, DFC Intelligence
[Lower costs] has been his party line for quite some time and it makes a lot of sense for Sony investors but could be tough for the game industry. So it is not a change but just a more public declaration of what has been said for some period of time.
The thing is companies like Sony and Microsoft spend billions to R&D and market a new console. Then they price it near or even below cost to build an installed base. Who reaps the rewards: consumers and third party developers/publishers. It is not a good business model for the hardware manufacturer.
What I think it means is 1) they are not going to be in a hurry to launch a PS4; 2) when they do launch a new system they are going to make sure the hardware is profitable. Obviously this may mean a higher price for the hardware; however, if Nintendo and Microsoft launch new systems first they may be able to be pretty high powered comparatively for a reasonable price.
Also I think both Nintendo and Microsoft have pretty much the same thinking where it doesn’t make sense to take a big initial launch on a new system.
Jesse Divnich, EEDAR
The consoles of the future will focus more on functionality and less on graphics. If we have learned anything from the onslaught of mobile and social games over the last three years, it is that consumers are beginning to prefer function, simplicity, and cross-entertainment integration.
The PlayStation 3 is already marketing itself as the platform with the highest standard in graphical entertainment, yet it continues to lose play-time share to devices like the Xbox 360, which offers a robust offering of cross-entertainment integration into its Xbox Live platform, and of course the mobile and social markets, which offers consumers the ability to launch and play games nearly instantaneously.
I believe the PlayStation 4 will focus more on integrating compelling online components and cross-entertainment offerings, over a “giant leap” in processing power.
If I had to sum up the goal of the next-generation consoles it would be to create a platform that is constantly in use regardless of the entertainment form.
There is a reason why the mobile market has grown so rapidly, and has nothing to do about its low prices, it’s about visibility and accessibility.
I don’t download PSN games and it is for two reasons, visibility and accessibility. I don’t know about the releases due to lack of marketing, which is the same problem that exists in the mobile markets; however, the mobile markets overcome this through an increase in accessibility, something that is lacking on the consoles as the moment. I am already using my phone for email, web browsing, and communication, and it literally takes me seconds to see what the current game offerings are. For the consoles, however, I need to turn on my console, load the store, search the store, and wait up to an hour to download a game. There are simply too many hurdles.
The Xbox 360 offers slightly better accessibility, since many consumers use their consoles to watch Netflix, Hulu, or play online games–it removes at least one of the hurdles of turning on my consoles, and it certainly explains why the Xbox Live platform has been slightly more successful.
Accessibility and visibility, that are the keys to success next-generation.
Michael Pachter, Wedbush Securities
I think it’s more than 3 years away, so pretty early to speculate. A lot can change. My view is that they started “development” on PS4 when the PS3 launched, and felt compelled to disclose now because of Wii 2. They won’t settle on final specs for another two years, so impossible to know what they will do.
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