Just read the following article* that speculates that AMD will no longer license their chip technology for new consoles to manufacturers but will instead sell the chips (APU or GPU) directly to them.
And so I was wondering what everybody thought of AMD's speculated new stand of selling their chips (APU for NextBox/Orbis and GPU for WiiU) vs. their previous licensing chips (GPU) on the Wii and Xbox360.
The article below will explain it better.
Please read the article below and see if you can help with a few Questions Below.
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http://www.xbitlabs.com/news/multimedia/display/20130123225745_AMD_Expects_Game_Consoles_to_Account_for_20_of_Revenue_This_Year.html
"According to AMD, game consoles are an area of interest for the company; particularly, an area of interest for the embedded products group. Previously – in case of graphics technologies integrated into Microsoft Xbox 360, Nintendo Wii and Nintendo Wii U – game consoles were an area of interest of graphics products group. ATI Technologies and then AMD has never sold GPUs for game consoles, but received royalties for every single console and every game for the consoles that utilize its graphics tech (such royalty payments may account for $10 - $20 - $30 million a quarter, not hundreds of millions AMD wants to get from its embedded business). The royalties are recognized as a part of graphics products group revenue. Apparently, this is going to change.
When asked specifically about game consoles during the conference call, AMD’s Lisa Su, general manager of global business unit, who also oversees embedded business of the company, said that the firm had already received first payments for Nintendo Wii U and those were recognized as a part of graphics business revenue, but for some reasons also mentioned the embedded business unit and its revenue targets.
“On the gaming revenue, I think we talked about the Nintendo Wii U that was announced in the fourth quarter and that was part of the revenue that was reported in the graphics segment. In terms of going forward, what we said is the embedded in the semi-custom business will ramp over this period in 2013 and we are on track for that 20% revenue target by the fourth quarter,” said Ms. Su.
Based on the comments made by Lisa Su and the fact that the only viable game consoles scheduled to be unveiled this year are Microsoft Xbox Next, Sony PlayStation 4 “Orbis”, it looks like AMD will not license its graphics and processing technologies to platform owners, but will sell semi-custom accelerated processing units to them.
Chips Instead of Licenses
Based on unofficial information, both next-generation consoles from Microsoft and Sony will utilize system-on-chips with up to eight Jaguar x86 cores and custom Radeon HD graphics engines. Considering that due to x86 license agreements with Intel AMD may have no rights to license x86 designs to any third company and has to build-in third-party IP into x86-based SoCs itself, there may be reasons why AMD is going to sell chips to console developers and not license technologies.
From many points of view, selling embedded custom APUs to Sony and Microsoft has a lot of advantages for AMD since it will naturally get more profit by selling chips than by getting license fees. On the other hand, the profit margin of such eAPUs will likely be very low. Moreover, AMD will have to handle all the manufacturing and logistics issues, which may not be too comfortable for a company with limited resources.
AMD did not officially confirm design wins with Microsoft and Sony or the changes in its relationship with console platform owners."
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Did AMD get royalties on all Wii/X360 games since they used their GPU? If so how much?
Will they still get royalties if they sell chip components instead of licensing them?
How much more will AMD make selling vs. licensing (or vise versa)?
How will licensing vs.selling effect the price of the consoles to the 3 manufacturers? (Sony/Nintendo/Microsoft)
Any other insights on the article?
