NJ5 said:
You're talking about fixed costs. What I 'm suspicious of are the costs of putting each copy of a game in flash. I haven't yet seen an argument for why these costs will be negligible even in 2011 for a big game (as they are with optical media especially DVD right now). $5 for 16 GB of storage media alone isn't acceptable I suspect (and that's not the current price). BTW, why did you mention HDD? That wouldn't be removed, at most it could be turned into Solid State Drive which is not free. Also it has nothing to do with game media, it's required either way for downloads etc.
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Flash is currently produced on the 50nm process node. At 30nm a 10mm by 10mm area of flash will likely be up 2.5* as dense. So if you had 1gb on that flash, you would now have 2.5gb. Intels 32nm process looks to be coming on stream by the end of 2009, so it does follow that they could easily start producing flash at the 22nm and fit over 4* as many transistors in the same area of silicon. So that flash you can buy on Newegg for $5 which contains 4gb of storage, will easily hold 4x that quantity by the time the next generation consoles are being produced.
I mentioned HDDs as they will become a required part of the console kit as optical drives simply are not fast enough to deliver the content a more modern console will require in a timely manner.
Tease.