Wont be too bothered by the Neo so long as Sony does not make any exclusives for it. Though it turns out that all that talk about about the power of the PS4 was a bunch of hot air.

For some reason people think that "If Sony Build it Developers must come".  What people forget is that developers did not ask for the PS4.5.  They are on no obligation to do really anything with it besides make sure games work.  What developers are obligated to is the current PS4 owners who are more than 36 million strong.  Their games need to work at the best they can or its no buy and the developers lose millions.  If the PS4.5 only play PS4 games as good as the PS4 then the developers have met their requirement of the system.

The point of the PS4.5 is not for developers, its for Sony.  Why people are making these big assumptions that suddenly their PS4 will get the lesser of the pie and developers will concentrate on a devlice with 0% marketshare seems crazy.  By the time the PS4.5 actually get enough market share to challenge 

It was powerful compared previous gen (just not as large a jump as previously seen perhaps) and compared to the other consoles this gen.  However, that was almost 3 years ago.  Technology is always moving forward, fast, and these days with more and more things vying for your attention (cell phones, tablets, cheap but powerful PCs, other consoles, etc) consoles need to always be moving forward too.  The idea that a console can essentially static for 7-10 years is over, frankly I think console being static for even 5-6 years is pushing it.  

I didn't used to think this a couple years ago, but as this gen unfolds I can see it pretty clearly now.  Dedicated Gaming Handhelds are at risk of being relegated to and ever smaller niche market (relative to the entire mobile gaming market) thanks to phone and tablet gaming.  Dedicated Gaming Consoles are also at risk of being relegated the same way.  Despite the PS4 success this gen, is shaping to being signifigantly smaller than the previous.  The ease of gaming on all these cheap platforms, the massiveness of Steam, give many people pause to continue buying into a dedicated console.

I used to always buy all the consoles every gen because each had compelling exclusives that I just had to play, now that is no longer the case.  First I dropped Nintendo, then I almost didn't buy the XBONE (I later bought one under pressure from friends), now I am pretty sure I won't be buying a Nintendo console ever again (unless they fundamentally change how they do things) and am probably not going to buy whatever MS decides to respond with when the PS4 Neo comes out.

People who are afraid of the PS4 Neo causing developers to make inferior ports for the PS4 need to remember how PCs work.  I can buy a game for my PC that it its best runs a certain way with certain graphic settings that might be below the best the game can offer.  While someone else can buy the exact same game, with the exact same code, that can run the game at it's highest settings.  This is because fundamentally the architecture of my PC is the same as their PC.

Fundamentally the architecture of the PS4 Neo will be the same as the PS4.  Which means their will be _no_ ports.  Zero updating and I will be able to pop my Fallout 4 disc into a PS4 Neo and it will play.  Now of course the developers of the game will want to create a patch that makes Fallout 4 run better on the PS4 Neo (IE closer to how it can run on the PC).

Once the PS4 Neo is out and new games are coming out that meet SONY's requirements, it will be as trvial as it is now on PC to release PS4 games that are able to automatically detect which version the PS4 they are running on and change the graphic settings accordingly.  Just like some PC games do now.  

I want to say that the market for PS4 Neo will likely be smaller than that of the PS4 primarily because it really only makes sense to pay the premium for Neo if the user owns or is about purchase a 4K display or is planning on buying PS VR.

This still represents a minority of the PS4 market.

Of course this is assuming SCE maintains sales of the PS4 as a $299 option compared to the $399 PS4 Neo.

I can't see SCE effectively raising the price of the PS4 by only offering a $399 upgraded option, seeing as how the MSRP bar has already been lowered, but we'll see.

Tablet and smart phone producers sell updated products with updated specs and features that run the same software as their predecessors, yet cost the same as when said predecessors were new to market.

The PC market in general works on the same principle where the same money over the next generation of parts buys better performance for the same price (looking at CPUs and video cards in particular).

It would be interesting to see if that's the business model SCE wants to push.

For what? Game installs?

It already offers external HDD support for media playback. Granted, it's for a very limited set of codecs (last I checked it was only mp4) compared to the PS3, which was a can opener for media formats, but it does play files off an external HDD. 

I wouldn't recommend using an external USB3 HDD for game installation as it would be slower than the SATA interface, resulting in potential performance issues that would be of no fault of the hardware. 

I did a 2TB internal upgrade and storage for game installations hasn't been an issue since. 

Re: OP. So long as it doesn't become an effective forced replacement/upgrade, it doesn't effect any existing PS4 owners other than to take a little luster off their "best performing console on the market" perception.

If any owners have an issue with that, I can only offer the advice of don't.

Manufacturers can and will update their products, and as long as said updates don't make existing products in use obsolete by hamstringing performance on new software, that issue is entirely related to an individual preoccupation of having what's newest.

While I probably won't be buying one on launch, when I switch to a 4K display, it will be accompanied by a Neo.

My original PS4 will continue to see use until it starts to malfunction. If it doesn't, then it's a secondary console for media playback and whatever games are already installed on it.

But cell phones are rendered effectively redundant for playing the latest games and apps within 3 years. That's a main reason why cell phones have the turnover rate they do - that and subsidized contracts. Is that something you want for consoles?

While I think both 8th gens should have had better GPU's at launch, so I see the need, but I don't think it will do much. I think most developers will not make that much of a difference.

Think about it, you can design a game for 30 million PS4 users, or say 3-6, and I'm being generous, PS4.5 users after the first year. Which market would you target?

I think it will mostly be exclusive that take advantage of the slightly more powerful console.

Oh..... I now see what is really going on here with you. 

Guess I should have read in between the lines sooner. 

I haven't run into problems with a 2012 iPad with regards to incompatible software or games; that's actually one of the problems I suspect Apple has been having with getting users to automatically upgrade them. That wasn't subsidized.

If I recall, MS already dipped their foot into the subsidized console business model with attached services with the XB360. Given that they didn't do the same with the XBO says that A) it wasn't a good deal for consumers. B) it didn't benefit MS to make that option available for consumers either.

Naturally, I don't see consoles as something to be replaced every other year, although I do tend to buy a console once a year due to supporting multiple platforms and hardware redesigns, which still isn't the same thing as buying a new console for the same platform every other year. 

Again, it only becomes a problem if a 3 year old console (I'd even argue 4 year old) is no longer supported by the manufacturer or third parties in terms of software. This is not the case with the PS4 update; all PS4 games will play on the PS4. Until I see examples proving otherwise, my opinion on this is not going to change.