Just came across this article. Summary:

Both MS and Sony thought they could shrink the current die like with their previous consoles, save costs and be more profitable. However the process itself wasn't as cheap as they it would be and would cost hundreds of millions. The result was Sony going with more powerful set up. 

http://vrworld.com/2016/05/11/amd-confirms-sony-playstation-neo-based-zen-polaris/

Now if Sony thinks paying hundreds of millions is not worth it, does that mean we could expect MS to do the same? 

If the rumors of a cheap PS Neo and a drastic price cut on the entry level PS4 are true. Everybody wins.

I can only image that a good portion of the PS4 owners will want to upgrade to the Neo system, meaning that a lot of people will get the chance to buy "Used, almost new" PS4s.

And since the entry level will be discounted, people selling their current systems will have to put them on a really good price. Meaning that even people on a budget will get the chance to get a current gen console.

Forcing both, Microsoft and Nintendo to sell almost at a lost, and then making sure that they release good software content to make up for that.

That's really interesting...

The more I think about it, the more I feel like I'm going to buy the Neo. I mean, Uncharted 4 at 60 fps? Damn...

I doubt there will be a drastic price cut for the normal PS4, as they won't want to sell it without profit and without a node shrink there is little Sony can do to decrease costs per unit

I think PS4 Neo could launch for 400€/$ and the standard model drop to 300€/$, possibly with bundled games

I think we might get better bundles at £250-300 for the old PS4 and the new one will probably launch at £350 with no games and £400 with a bundle. 

Again, If true, both these companies (Sony and AMD) have just spinned the information well enough for people to accept.

So they are basically telling me that AMD is not willing to manufacture or pair the the performance of their new 14nm chip designs to meet the current PS4 specifications. And they want me to accept this by swallowing that Sony would have to pay in order to redesign their own chips specifications to the new 14nm size. While it is true that the APU is a new technology for the console line up this year, I find this very hard to believe:

1. I can't swallow that Sony did not have a contract with AMD in the beginning of this partnership. You mean to tell me that a company does not want to protect the price of the raw materials needed to produce its machine? Hell, there is even a thing called hedging that companies do (literally gambling) that insure that they will not deal with spike hikes, let alone technological innovations. F U Sony! I'm not eating your Bullshit!

2. You are telling me to believe that AMD would not do what it's customer demands of it? Shit, even Wal-mart changes policy when it's customer base demands it. So AMD never had a plan to reduce the cost (include a design parity CPU/GPU specs to a new piece of 14nm silicone chip) for it's client for future iterations? I'm not eating your Bullshit either AMD!

3.* (I forgot to add this) I believe AMD did the redesigns for the Xbox 360. They shrunk the die of the GPU and then pair them later on, and I didn't hear any of this BS (power upgrade nessassery) back then.

You guys can accept, I'm not. In today's day, the people that hold the power know how to spin information to meet their desired reality. If you believe it, it becomes your reality too.

You do realize that we're talking about video game consoles right? Because that is some fifth of November shit you just posted.

Anyways, this isn't Sony or even AMD telling us this is why Neo is happening. This is just individual speculation based on the information available. Nobody is trying to sell you bullshit.

Sony wouldn't pay the costs for a die shrink though. AMD would, some of that cost might trickle down to Sony, but it's not like Sony would have to pay the hundreds of millions of dollars a die shrink costs.

The reason is that the slim versions (which always come in more expensive than older model anyway) are very successful. So instead of just a paint job they figured, why not tweak what's under the hood and get better performance for the 2nd half of the generation/extending life of the product.

This. Much of the profits from the console sales come a few years into it when they do a 'slim' version.  The Xbox 360 had something like 6 revision before the E model came out in 2013. 

I don't think the article is right, a die shrink doesn't usually require the redesigning of the chip.  It just upgrading the manufacting system, which uses less silicon, produces less heat, etc.

I think Sony is going to Neo for marketing.  It's like how the 'it 50% more power' buzz (which isn't true) get spread. 

I don't 3rd parties will do much with Neo in the same way they didn't do much when 'Wii Motion Plus' came out.