Wii U vs PS4 vs Xbox One FULL SPECS (January 24, 2014)

[Viper1]

Sony can't make a heavy loss leading powerhouse next generation.

Now I know the big costs with the PS3 were CELL and Blu-ray which will no longer be a factor with PS4. But there is a new factor in play these days that Sony doesn't control. The foreign exchange rate. The Wii launched in Japan for ¥25,000 which was ~$205 at the time. It launched in the US for $250 (keep in mind that Japan didn't pack in Wii Sports with it). But the Wii U is launching in Japan for ¥26,250 (not much more Yen than the Wii) which is $335.32 today. It has a US launch price of $299 (no bundled game for either territory).

See how huge that difference is? ¥25,000 is $319.36 right now. It was $205.00 back in 2006.

The high end PS3 launched in Japan for ¥59,980 which was $558 in 2006 but is $766 today. So even if they dropped the PS4 launch price to, say, ¥39,980, that still makes it $510 today. So no matter what, provided the exchange doesn't rapidly move to weaken the Yen in the next year, Sony will either have to launch with a very large loss or reduce the capabilities of the system to launch at a more market friendly price. This is one of the reasons the 3DS launched at such a high price compared to the DS several years before. To hold the same margin of profit or loss, now requires a far higher foreign price than it did before.

And a $100 loss per console is far too much for them as a company now than it was back in 2006. In 2006, they were a financially sound comapny. That is not the case today. If they sold 10 million units at a $100 loss, that's a $1 billion loss to a company that can't handle taking on another billion dollar loss.

And keep in mind that ¥59,980 was with a huge loss (Cell and Blu-ray) meaning that a ¥59,980 price would likely break even now but again that pushes the US price to $766. But they can't sell the PS4 at $766 in the US so they'll have to take would could be as high as a $266 hit per US PS4 if they were to sell it for as low as $500. Dropping the Japanese price to ¥39,980 would give it a global price that's attractive but again would cost them ~$250 in losses per unit.

The strengthening of the Yen and the weakening of the US dollar, Euro and Pound will have the single largest impact on the capabilities and prices of the consoles from Nintendo and Sony. We've already seen this with the 3DS and Wii U. We'll see it with Sony as well.