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HappySqurriel on 26 November 2012
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JEMC said:
HappySqurriel said:

What I was suggesting is that they would have to take significantly larger losses to preserve their price point ...

Nintendo is not incompetent and it is unlikely that Sony or Microsoft could produce a dramatically more powerful system than they could for the same price using the same amount of energy. So, if Nintendo is spending 50% more to manufacturer the system (excluding the controller) and it is using twice the electricity it is moderately safe to assume that Sony and Microsoft would need to increase their manufacturing cost by at least 50% and use at least twice as much electricity to maintain their processing power advantage. Suppose Microsoft los $100 per XBox 360 at $300/$400 meaning their manufacturing cost was $400/$500, if it costs 50% more to maintain their processing power advantage the manufacturing cost increases to $600/$750 and Microsoft loses $300/$350 per system sold; even by Microsoft standards that is insane.

I see, but I disagree.

You are taking those numbers taking the WiiU as your baseline and while you can do that, you should also take into consideration how Nintendo works. Nintendo focus on low power consumption and that bring extra costs that the competition don't have. For example they said that they went with the MCM to save energy and space and that goingthat route was more expensive. Msoft and Sony will launch with 2 chips and will only try to get them fit into 1 later in the lifetime of their consoles.

And let's look at it from another point of view. Microsoft. When they launched the 360 it was based on high spec'ed parts. They went for the best they could manage (cost, heat, etc) and went for it and that made them lose those $100 per unit. Now they won't be able to do that because the high spec'ed components of nowadays are out of the reach for a console, mainly because of heat. So they will have to deal with, at best, the second tiers for each category. Add that to the fact that Nintendo made their hardware decisions in 2008 (hence why the rumors of and HD4000 based GPU) while the other have made their decisions in 2010 or 2011 and you end in an scenario were their console can be much more powerful while not being astronomically expensive.

Or to put it in another way, WiiU costs $180 to make losing only a few dollars. Msoft could make a console for twice the cost and sell it for $300 losing only the same hundred dollars that last gen.

I just see it as a balancing act between 3 variables, power, energy consumption and cost ... Nintendo increased cost and power consumption moderately in order to increase processing power. For Sony and Microsoft to preserve their advantage in processing power they have to make concessions in either energy consumption or cost.

 

Now, I'm not claiming that Sony or Microsoft can't produce a significantly more powerful system, I'm just saying their systems will likely have a smaller processing power advantage than the PS3 or XBox 360 did. I'm personally of the opinion that both manufacturers are going to release $400 systems that are similar in size and energy consumption as the slim version of their previous generation console, and they will probably be about 3 to 4 times as powerful as the Wii U; much beyond that in terms of processing power will likely result in being too expensive or running too hot as a home console.