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thismeintiel on 22 June 2014
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fatslob-:O said:
thismeintiel said:
If a long time is 2-3 years, sure, it'll be a long time. And in reality, Sony cost of manufacturing is probably going to go down quicker than MS.

While they will both benefit from AMD reducing the prices on their chip manufacturing, since MS needs far fewer chips because of lower sales, they will always have to pay a higher price per chip than Sony, even though MS is already using a cheaper GPU as their base. DDR3 probably isn't going to get much cheaper than it is, now. I've even heard some theorize that it may actually go up in price as more move towards GDDR5 and DDR4. Their largest savings will be if the ESRAM they are using drops in price. Of course, with so few using that design, I don't know how fast that will happen.

Sony, on the other hand, gambled on GDDR5 and it's paid off. As more graphics cards switch to that type of RAM, the prices will begin to plummet. Also, the reverse of MS's situation, because of much higher sales, and therefore more units needed, Sony will pay a much lower price per unit.

In the end, one will switch to $349 next year. Either Sony because manufacturing costs have dropped, and want to bring even more heat to MS. Or MS to try and stay competitive. In 2016/17, we will 100% see both consoles at $299. And once the PS4 reaches $299, look out.

I was expecting that we were going to keep the $300 and over for 5 years rather than 3. As for your statement that the cost manufacturing will go down faster for Sony rather than Microsoft, I don't believe that for the most part as they'll be using fab plants with similar manufacturing technologies. 

Just because Sony might get more leeway on the savings for manufacturing chips at a higher volume compared to Microsoft doesn't mean that it will end up being much since both of the volumes are in the millions of chips. I also don't see GDDR5 getting significant cost savings either because their will be no cost reduction benefits when moving to more advanced manufacturing technologies. 

Sony gambling on the GDDR5 definitely paid off but I still don't see much cost reduction in the future and the majority of the discreet GPUs sold also feature GDDR5 so I don't know you used that piece of information as a motivation for thinking that there would be a lower cost to manufacturing. 

Off-topic: The next generation may really be the last generation of consoles since moore's law will have died and therefore will give very little incentive to upgrade on newer iterations of consoles. 

For 5 years?  Sorry, but I think you have gone a little nutty.  No way the PS4 will still be $300+ in 2019.  By then, a slim model will have been out for at least a year or so, which would significantly decrease the cost of manufacturing, allowing them to drop to $299 (if it hadn't already dropped before then) at its release, and definitely $249 after how long it will have been out by 2019. 

And yes, if MS is going to need fewer chips, they will have to spend much more per chip (they already do, even without the difference in quantity) than Sony will when ordering much more.  All manufacturing works this way.  So, there will be no change in this practice just because there has to be to be to fit your scenerio.  Same goes for GDDR5.  The more it it becomes the standard and is ordered in higher quantites, the cheaper it will become.  All electronics components work this way.  Something tells me you didn't truly think this through before posting.

And one VERY important fact you are dismissing in this whole outline, is that Sony and MS are fine with taking a small loss on the HW, as long as it allows them to stay competitive.  Sony is already making a profit off of the PS4 HW, as is MS on (at least) the One + Kinect SKU, and this is just a few months after launch.  So, Sony could probably afford to drop the price to $349, now, without taking much of a hit.  In about a year or so, they will probably be able to drop the price to $299 without taking much of a hit.  And so on. 

MS, is also going to start to get deperate as this year goes on, meaning they are going to want to undercut Sony's price.  Either by this year's Xmas, or by Xmas in 2015, they WILL drop the price to $349.  Sony will most likely follow suit.  Then, once MS is feeling even more heat in 2015, they will make another drop, either by Xmas 2015 or 2016, to $299.  Again, Sony will follow suit.  In other words, as soon as the companies can drop the price, while either breaking even or taking a small loss, they will enter into a pricing war.  Since MS already cut out Kinect and dropped the price this year, I expect them to wait until next year til they lower it, again.