We don't even know what it is yet...

People complained that they were underpowered at the start of the gen. With the upgrade being just an extra 30%, all we have is a slightly less underpowered console. Consoles can't keep up with the PC Jonses because high end gaming PCs are far more expensive than consoles so the best you can get is mid to low end gaming PC power into a console. The only real power issue is between consoles of the same generation. And in that PS4 is the powerhouse, at least ujntil NX hits the streets.

The reason behind PS4.5 is not about PS4 being underpowered. It's about trying to get a boost in sales of 4K TVs.

No, only a vocal minority of PC gamers complained about the consoles being underpowered. Everyone else just bought the, and enjoyed them.

A fool being easily parted with his/her money by being an early adopter of PSVR, will happily buy PS4K in order to maximise his/her VR experience. Those not foolish enough to be early adopters of PSVR won't care if Sony releases PSVR games that are "PS4K required" because before those games are PS4K required they are PSVR required and we don't have the PSVR. So it's rather a wash as far as VR goes.

As long as Sony doesn't start putting out games that use the traditional DS4 for controls as PS4K only then I don't see any backlash coming from those of us who are happy to stick with our outdated model. I think the biggest risk is lack of meaningful content that makes the 4K a better gaming experience than PS4, and thus backlash from PS4K early adopters because they are not getting the bang for the buck they expected. We're almost getting a PS3 de ja vu, where people had to justify paying the early gen high price for PS3 because of the non-gaming benefits (It's how I justified it to my wife after all..."look honey, we have a Blu-ray movie player...and it plays games."). Fortunately this time 'round Sony isn't only offering an overpriced product with little by way of notable gaming benefit. They are also continuing to offer a well priced product that will satisfy core console gaming needs.

The downside risks aren't big as long as Sony doesn't do stupid things. But I don't see much upside benefit either. So the whole exercise is likely to end up being pretty neutral in terms of Sony's bottom line and PS4's market position. 

Follow the bread crumbs.

Project Morphius (PSVR) and Project NEO (PS4K). They were made for each other.

Developers have an October deadline to support PS4K. PSVR launches in October.

Sony knows the standard PS4 is maxed out running PSVR games at PS2 to PS3 graphics levels while maintaining the 90 to 120 fps. A more powerful console is needed to support current gen games in VR. The NEO is that console.

That would be odd...  If that ended up being the case with a PS4K, what would be the point of making it then?

ppl just love to fear the worst case, which here would be that the PS4 versions don't get much care and run poorly - I think devs/pubs would need to be extraordinarily stupid to neglect the user base of the original PS4 and games with gameplay affecting performance issues will be rare

looks like every console gamer has been fine with that for the last 20 years

btw, the PS4 games themselves (which you usually spend much more money on than on hw) aren't inferior versions (unlike e.g. PS3 versions of x-gen games), they are able to run in Neo mode (when supported) once their owner decides to pick up the new console version

higher margins now and higher potential for cost reduction of key components (the APU) offering higher margins in the future when sales price inevitably needs to be reduced

Yup... If anything, base PS4 will get more optimizations than NEO for some time.  Why?  40m install base.  
NEO potential sales will just be a fraction of that for years to come, no way around that.  
And if they give NEO only half the optimization effort, they can get a noticeably better experience, so why try harder? (at this point)

Good point.

I understand why Sony is going for this move, and really it is independent of any one material factor (e.g. PS4's power, 4K, etc), rather it's systemic.
The generation system is inconvenient for Sony because each time they start from scratch, they can't really achieve a persistent "platform".
The point is having continuous compatability that doesn't break the platform, and doesn't disrupt games sales depending where in gen they are at.
When they release a new model, they tell devs "If you want to continue to sell to our fat prev-gen install base, you also must support NEO per our min reqs.
I.e. even when next-gen install base might not otherwise attract dev attention, the COMBINED install base of platform certainly makes it worthwhile.
Probably the strongest case will be the Japanese devs who didn't push PS4 games out quickly upon release.  Well now they will with NEO.
With NEO they seem to be retaining exact CPU core, just overclocking it with process shrink, but I would guess after NEO they will adapt newer innovations from AMD. 

Your thread title is funny considering the news is like, a week old?

If only Microsoft news backlashes only lasted that long lol

On topic, this is Sony capitalizing on their lead, your damn right people will trade in their PS4 to get a Neo, and stores sell those used ones back at a discount. The culture these days is resolution and fps, so this will print money by default.