Industrygamers

Sony's chief financial officer commented today that the company won't be investing as heavily in its next console as it did with the prohibitively costly PlayStation 3. This is a very interesting statement to come from Sony, and it could speak to a change in philosophy towards console engineering overall. While Ken "Father of the PlayStation" Kutaragi had always wanted the best technology available for PlayStation, Sony's business can't afford to take massive hits in the future. 

So does this mean that PS4 might be somewhat underpowered? Will Microsoft or Nintendo have the edge? IndustryGamers put the question to several analysts.

Asif Khan, Panoptic Management Consultants

I have always wondered if Sony would be able to make another console, so I guess it is good news that they are working on PS4.  I am not sure that Sony is in a position to lose as much money on console system sales anymore and this undoubtedly puts Microsoft in the driver's seat for the next console cycle as they can take a bath on systems and make it back from software sales and XBL.  It could mean that Sony isn't going to invest too much in developing from scratch by using more existing parts. For the PS3, Sony helped develop the cell processor and partially owned the cell fab factory.  

Perhaps we could look at the NGP as a model for what to expect from the PS4, and if the recentrumors of the NGP RAM being cut in half are true this could support the idea that the PS4's hardware could be less impressive than the PS3 at its launch.  I think Microsoft will really be able to put the screws to Sony in the next console war, but the problem is that Microsoft has had trouble making good hardware in the past.  As much as I dog Sony, they are great manufacturers.

I think the CFO is really commenting on the state of the whole company.  TV, Film, and Music are all draining the cash from the good divisions like PCs and gaming. If the PS4 is just a me too system when compared to Project Cafe and the next Xbox, it could fail.  Which is pretty pathetic given the huge lead they had from PS2 momentum.  To me, it sounds like Sony management is capitulating and this is why I couldn't upgrade the stock earlier this week when it hit a 52 week low (we currently rate SNE as "Don't Buy.")  Management continues to lack any kind of vision.  So yes, I think the risk of the next Xbox being better than PS4 is very high.  Microsoft wants to win the next console war and it will most likely come down to them versus the Big N.  XBL is a great platform and Microsoft is going to give it their all.

David Cole, DFC Intelligence

[Lower costs] has been his party line for quite some time and it makes a lot of sense for Sony investors but could be tough for the game industry. So it is not a change but just a more public declaration of what has been said for some period of time. 

The thing is companies like Sony and Microsoft spend billions to R&D and market a new console. Then they price it near or even below cost to build an installed base. Who reaps the rewards: consumers and third party developers/publishers. It is not a good business model for the hardware manufacturer.

What I think it means is 1) they are not going to be in a hurry to launch a PS4; 2) when they do launch a new system they are going to make sure the hardware is profitable. Obviously this may mean a higher price for the hardware; however, if Nintendo and Microsoft launch new systems first they may be able to be pretty high powered comparatively for a reasonable price. 

Also I think both Nintendo and Microsoft have pretty much the same thinking where it doesn't make sense to take a big initial launch on a new system.

Jesse Divnich, EEDAR

The consoles of the future will focus more on functionality and less on graphics. If we have learned anything from the onslaught of mobile and social games over the last three years, it is that consumers are beginning to prefer function, simplicity, and cross-entertainment integration.

The PlayStation 3 is already marketing itself as the platform with the highest standard in graphical entertainment, yet it continues to lose play-time share to devices like the Xbox 360, which offers a robust offering of cross-entertainment integration into its Xbox Live platform, and of course the mobile and social markets, which offers consumers the ability to launch and play games nearly instantaneously. 

I believe the PlayStation 4 will focus more on integrating compelling online components and cross-entertainment offerings, over a "giant leap" in processing power. 

If I had to sum up the goal of the next-generation consoles it would be to create a platform that is constantly in use regardless of the entertainment form. 

There is a reason why the mobile market has grown so rapidly, and has nothing to do about its low prices, it's about visibility and accessibility. 

I don't download PSN games and it is for two reasons, visibility and accessibility. I don't know about the releases due to lack of marketing, which is the same problem that exists in the mobile markets; however, the mobile markets overcome this through an increase in accessibility, something that is lacking on the consoles as the moment. I am already using my phone for email, web browsing, and communication, and it literally takes me seconds to see what the current game offerings are. For the consoles, however, I need to turn on my console, load the store, search the store, and wait up to an hour to download a game. There are simply too many hurdles.

The Xbox 360 offers slightly better accessibility, since many consumers use their consoles to watch Netflix, Hulu, or play online games--it removes at least one of the hurdles of turning on my consoles, and it certainly explains why the Xbox Live platform has been slightly more successful.

Accessibility and visibility, that are the keys to success next-generation.

Michael Pachter, Wedbush Securities

I think it's more than 3 years away, so pretty early to speculate. A lot can change. My view is that they started "development" on PS4 when the PS3 launched, and felt compelled to disclose now because of Wii 2. They won't settle on final specs for another two years, so impossible to know what they will do.

http://www.industrygamers.com/news/xbox-will-really-put-the-screws-to-ps4-in-next-console-war---analyst/

Why would Microsoft be any more willing to "take a bath" on their next console than Sony?   The living room market turned out to be far less lucrative than either Sony or MIcrosoft envisioned back in the late 90s, with smartphones becoming the far more popular and successful convergance device market. 

Both companies are now in a position where making money is more important than marketshare.  The billions lost on the original Xbox, 360 launch, PS2 launch, and PS3 will not happen again, as there is no longer any long term goal that'll make such expenditures worthwhile.  The "battle for the living room" ended up not being much of a battle.  It's now a battle for your pocket, and that's where Microsoft's money is going.

While Khan is a troll, everybody else, especially Divnich, make very coherent points. With what the NGP seems to have going for it, it is indeed going to be about intergration and accessability. Besides, with the graphics modern consoles are putting out, no leap is even needed. You just need to smoothen the edges, improve the textures, and make 1080p a given.

Either way, power is never the way to go if you want to win. Generation after generation after generation, marketing, word of mouth, accessability, and brand strength sealed the first place.

I actually felt Divnich had a rather inaccurate view of the 360 vs PS3 scenario.  He implies that the 360 is the more popular console in North America because of it's non-gaming functionality, and the PS3 is marketed primarily on the back of its graphics, whlie he ignores both the fact that many buy PS3s to use as Blu-ray players and PS3 owners make up the largest percentage of Netflux.

The PS3's non-gaming functionality is one of the things keeping it alive in the US.

He's mostly right. A good lot of PS3 commercials emphasize realism and graphics as a selling point... and I don't really see why would you bother with a PS3 for blu-ray with standalones being so damn cheap. Netflix is something I'd agree on, however... but I don't think it's a selling point for either, with it being ready and great on PC.

Well, statistics generally say the PS3 is more often used for non-gaming functionality between the two, so if one's being bought more for games and one is not, I'd assume the latter would be PS3, which is the opposite of what he's saying.  But I agree that Sony markets the graphics angle more. 

I guess I can agree with that, but after reading Khan, he struck me as awesomely insightful, which is probably why I liked him so much ;)

I think MS will be successful for a slightly different reason. They have raised awareness and have had decent success with their prototype for motion gaming, that was Kinect.

Now for their next console, all they need to do is:

-Put in relatively new hardware (at least beyond what Wii 2 is doing) which should keep the hardcore happy and 3rd party support going strong. But from what we know, Wii 2 is using 2007 hardware, so whatever MS do will probably be better.

-Have more XBL functionalities and even more improved connectivity.

-Build in Kinect with head tracking, 1:1 and perhaps a few new innovations allowing for both casual and hardcore games.

-Price that bitch competitively and market the fuck out of it (like they did with Kinect).

-Swim in cash.

I personally think the nextbox has the potential to be the system where for the first time, the hardcore and the casual can live together in harmony. If they can manage that, sales will be INSANE.

I doubt Next Xbox can be as strong as it has been this gen. It had RRoD issues in the past, and now it does not have much exclusives. Games sell systems. I doubt Microsoft has something in their sleeve to tackle the huge game library and ips of Sony and Nintendo. 

Horrible article.

- Sony's entire brand image/corporate image is based on high tech and quality these days. People shouldn't imply that Sony are going to be producing some inferior product. Sure, there's a chance the NextBox will be more souped up, but the PS4 will still be powerful. 

- Sony havn't implied anything really. They obviously do not want to lose billions again, and they haven't released any NGP specs - so we don't know if they are cutting RAM or not.

- MS aren't going to make big losses next gen either. They have shareholders, shareholders that will want to see the game business produce profits. Also as MM said,  Microsoft's money is going elsewhere. Sony isn't the threat anymore to MS - It's Apple and Google.

- Finally, I'm no stock expert, but I would buy Sony stock right now. The company is the healthiest it has been in 5 years and has forecast good sales increases across its core segments. It also predicts returning to operating profit, and Nintendo don't seem to be as dominant these days.