You are trivializing how hard it is to regain $1 billion on hardware losses.   If it were that easy, Why don't Sony and MS chop off $100 from their consoles right now? Because they don't need to, they can gain a profit AND sell their system for a price that'll sell well. The loses on the console at the start is so they can make it as powerful as possible but still try and sell it at a reasoble price, as you know.

I wouldn't say I'm trivialising, I'm simplifying. You haven't countered my point, do you think they can't make it back through software in a year? Do you think a year is too long? 

And your quote, "unless we are talking PS3 scale money" is exactly what I talked about in the rest of my post.  Why didn't you address that?  Because we aren't talking about a PS3-scale loss. A $100 loss on the PS4 that'll most likely use slightly modified "off-the-shelf" parts is not on the same scale as PS3's situation. That was pulled from the middle of my post.

Oh, that.

I'm not sure it will have any impact on the graphics of the console, that's what the GPU is for, but at least it won't be a bottleneck unless they have clocked it at a ridiculously low speed.

We'll have to wait for Viper1 or someone with more knowledge about this things to know more.

Except the average consumer doesn't spend nearly that much money on games ...

For every year they owned their system the average Wii owner bought 2.81 games, the average PS3 owner bought 3.01 games, and the average XBox 360 owner bought about 2.75 games; all very rough calculations. Being that you can really only associate the licensing fees to cover the costs of the hardware, if you assume $10 in licensing fees it would take (on average) about 3.5 years to cover that $100 loss for the average consumer.

Even then, if we say 2-3 retail games are bought in a year (though I notice it's the average for all years, do you think the first year average would be higher? I don't know, just wondering if you could get that data from wherever you got those averages) it's still more than possible to the money back through software because there will be more ways to do it. There will be F2P games where players will make microtransactions, there will be more cheaper, smaller titles or they'll be promoted more, that'll probably boost those averages. And look at all the extra services PS3 has like Netflix and PS+... I think it's fair to say they'll have even more subcription based services next gen, for streaming for example.

If your system is like the PS2 and launches before the competition, manufacturing costs are dramatically reduced prior to facing price cuts so the $100 loss on a system is a temporary thing, and you eventually build a massive userbase that buys games to cover your initial losses a $100 (or even $200) loss can probably be justified. In contrast, if you're like the XBox and you launch later than your competition who forces you to lose money on hardware throughout the system's life you will probably lose $4 billion in a generation off of a $100 loss per system.

I doubt we're going to see this with PS4 though, it's main competitor concerning the power of the system will be nextbox, and they're probably gonna release close to each other. Sony has said they don't want to be last again, the PS3 was so late largely because of delays that they'll probably try harder to avoid.  What you're saying is that the $100 loss won't be made back if the console doesn't sell well, because if the console doesn't sell well not much software will be sold right? That's what happened to Xbox though I don't know what loss it took. 

For the graphical leap PS fans are expecting it to have, it'll be another 600 dollar console, with over 100 dollars of loss per console baked into that price.  Or a 400 dollar console with 300 dollars of loss built in.  No one is going to greenlight that project.

These seem like baseless assumptions, I'm a PS fan who's expecting a leap that can easily be achieved with $500 hardware (sold for $400). What kind of leap are you imagining PS fans are imagining? How is the graphical leap relevant to me saying they can make a $100 loss back?

Otherwise, it'll look just like WiiU graphics.  Who's going to buy a PS4 that has graphics like a WiiU with less titles for 100+ dollars more than a WiiU?  The Sony faithful, and the sony faithful only.

And I wasn't talking about the loss per console like PS3.  I mean the general loss situation like PS3. So do I.

Not to mention that the console is going to get panned for its hardware being left over unwanted PC components just like the original Xbox got panned for the same thing.  Because from what I'm hearing, that is exactly what PS4 is going to have: an x86 AMD processor with built in gfx processor.  In fact, they may be trying to do what they've done every gen since PS2 and claim its actually a computer, not a game console.  Heck, it might even launch with Windows 8 installed.  Wouldn't that be ironic.

Both PS360 consoles are rumoured to be using off-the-shelf parts that'll be slightly modified, so what? Why do you describe them as "left over unwanted" pc parts?

edit: read my replies to viper and happysquirrel before you reply because those might answer a question or counterpoint you're about to write.

They won't make a $1 billion loss. They'll lose that much on consoles, but make it back within maybe a year through software sales and to a much lesser extent peripheral sales (if they make a profit), give it another 6 months oon top of that for R&D, manufacturing and what not.

Viper buys a PS4, Sony loses $100. Viper then buys 5 or 6 retail games over the next year, a few smaller downloadbles and maybe some Minis, subscribes to Netflix, maybe a new streaming service or PS4 or PS+, he makes some microtransactions on F2P games, possibly buys another controller or PS eye/Move 2 (or whatever they may have)... etc.

That money is definitely made back (unless it's PS3 scale money), it's just a matter of how long it takes. A year/year and a half due to $100? Not a problem. 

LOL you do realise all the profit Sony made with the PS2 was blown on hardware sales of PS3, which even lead them to be significantly in the red?

They have only jsut made it back to  profit stage when looking at overall picture since Sony has been in the console race.

I guess to get on the same page I need to ask this question: What example of "next gen" graphics do you expect PS4 to achieve?  I've heard other people throw around Starwars 1313 as an example.  Is this approximately the level you expect?