I realize that the proverbial saying is that digital technology is supposed to get cheaper with time but this time it won't hold true temporarily. Manufacturing costs for the chips will most likely stay the same for quite some time because of the fact that making chips on the state of the art wafers will provide no cost reduction when using the previous 28nm technology. The fact that multipatterning became the winner in order to to increase chip scaling means that chip designers will have a harder time giving incentives for the consumer to upgrade as multipatterning is a very expensive solution. This will mean that starting now, transistors are going to cost more rather than less when moving down to below 28nm technology. 

This is the reason why I don't see the PS4 and X1 going below the $300 price point for a long time but that's not all ... This affects PC gaming too as that crowd won't be getting significant increases in the performance per price ratio in the future compared to the current consoles. The days of having gaming rigs that are 10 times more powerful than consoles for a sensible price of under $1000 in the extended near future are over for the most part. Some will keep using the having a better achitecture argument but that's mostly useless since they pale in comparison to the amount of performance gained by just simply having greater chip scaling. 

I am happy.

This'll hurt future consoles too just so you know ... 

I know it very well. But I am happy. Arent you happy?

How can I be happy about this since I'm primarily a PC gamer too ?

Oops. I forgot that. This gen I am completely switching to consoles and laptop instead of PC and consoles like last gen. So its perfect for me. Its perfect.

And if I upgrade my PC it will be long after. I want DDR4 and haswell processors. So in the near future no PC upgrade for me.

Sonys good at shrinking their hardware and dropping price.

PS4 slim in 2016 at 199 !!!!

MS will be forced to reduce the price of X1 sooner or later and the PS4 will stay close to it.

All the processors in the PS4 costs around $121. The APU alone probably cost them around $100 of that amount. That APU as it stands probably costs AMD less than $20 to make and are being sold (for now) at a $80 profit.

They have arrangements; like milestones. So Sony may be paying AMD a fixed amount for the first 20M APUs, then after that, as per contract, the next 30M APUs would be a different lower price. Thats kinda how stuff like that works and something Nvidia doesn't do too well which is why everyone kinda tries to avoid having to deal with nvidia.

Besides, the APU, there are many other areas that can bring costs down. Take the RAM. THe PS4s RAM cost them $88 right now. But those terms were made at a time when the GDDR5 ram modules sony were trying to use weren't even a mass market item yet. As time goes on and with more and more GPUs coming with larger memory sizes, costs of those will also go down too. By this time next year sony could very well be paying like half of what they pay right now for it.

Lastly, they don't really have a choice. By the middle of next year while we may not see a direct price drop, we will see soft price drops. Think destiny PS4 bundle @$399 which would kinda mean a $50 price drop from what it will sell for now. By the fall of 2015 we would have flat out price drops to $299 with no bundled in games. And around 2016 we will see another soft price drop and a full drop again in 2017. By 2017 I expect these consoles to be around $199-$249.

Especially if someone is doing much much better that the other, the loser will be more aggressive with price drops forcing the winning platform to respond in kind. This couldn't happen with the PS3/360 gen cause the PS3 was $200+ more expensive than the 360 right outta the gate.