I don't believe the Pro consoles extended anything all that happened was if you were a gamer who wanted standard PS and Xbox games with a smoother experience or were a later adopter you now had that choice.

No worries.  :)  I don't share all of Spencer's assumptions, no.  But I shared his perspective as an FYI.

It's impossible to know what to make of the PS5 (optical drive edition) being profitable after a year or so, because we don't know how much of a loss they were taking up-front.  It's a big difference if it goes from costing $525 to make down to $475, than if it goes from $600 to $400, for example.  We don't know enough to draw strong conclusions from that.

I remain curious why you think Microsoft made the wrong call, when this is the strongest start to a generation Microsoft has had yet.  Seems like the market is embracing their decision.  It's entirely possible that Sony and Microsoft *each* made the right call, as perhaps each of them made the right decision for their respective market segments and brands, in fact.  COVID was a double-edged sword, increasing demand but reducing supply, so I'm not sure it had a huge net effect.

As for long-term pricing, time will tell.  Perhaps in several years one of us can come back to this thread and comment.  However, I don't see why a PS5 slim would drop as low as $250, yet you think the Series S is only likely to drop down to $200?  Can you explain why such a small delta between them?

I'm skeptical of any PS5 variant dropping as low as $250.  Heck, the PS4 slim's MSRP is still $299.99, and it's been over 9 years.

Back when a lot of games only came to consoles, I would have agreed with you.

Now with almost every game also coming to PC, and with PC games needing to scale, I don't think it's a big deal anymore.  Recent Digital Foundry analysis shows that most console releases these days are simply set to settings that match PC pre-sets, rather than custom settings.  And even when they are custom settings, they're still within a scale-able engine.  So scaling between multiple console configurations just isn't as big a deal as it used to be.

And here we are with cross-gen games, 2 years into this generation and counting.  I've said it before and I'll say it again, I think most developers would rather retire the last-gen as fast as possible, as that's a bigger hassle for developers than supporting both Series X and S (which are on the same architecture and run the exact same code base).

I'm pretty confident they meant no longer selling at a loss with being 'profitable'. No way did they reclaim R&D costs already and I doubt hardware sales ever become net profitable during a generation.

Covid's net effect was to push the Series S ahead as the available alternative, while also slowing down the generational transition keeping the Series S relatively close in fidelity to the Series X and PS5. Covid also pushed gamepass ahead which is all you need on Series S.

So yeah, it's the strongest start to a generation MS has had yet, but everything Covid has been in MS' favor. The big currency swings also made the Yuan more expensive against the Yen yet less expensive against the Dollar which drove the PS5 price up first, while MS could compensate by paying less for production.
Hardware sales: Series S was the most available, PS5 the hardest to get.
Software sales: Gamepass offered the best selection, new game releases stalled/delayed/had problems.

MS certainly made the right call considering the circumstances.
Sony made the right call as well, selling everything you can possibly produce, nothing wrong with that.

And now we have some competition between the two.

A $250 PS5 is not gonna happen, I doubt it will even go under $350. That $299.99 ps4 slim MSRP from 2016 is already $372 in 2022 after inflation. More likely a slim version will go back to its original launch price :/ US just got lucky with a strong Dollar to Yen conversion keeping up with the inflation rate. Everywhere else the ps5 has increased in price.

Perhaps I am misreading, but this logic has proven faulty many times over.  It's the "MS needed to do this, Sony doesn't" mixed with "Sony was the winner, so..." sort of talk, and I mean - just look at history.  There is very little MS has done since entering consoles (and very much so starting with the announcement of the 360) that Sony has also not done after MS proved it out (or just announced first, if we think of the PS3 announce at E3 months after the 360 announce, and how much smoke a mirrors Sony used at that event to say "that, but better!").  Free games with a sub are one of few examples where Sony did it first and MS copied them.

Whether MS "needs" to do something is irrelevant - did that that thing turn out to be historically correct?  I guess the question boils down to if the Series S seems as historical correct as it seems right now.  Obviously global/economic issues make it seem even smarter, but the reasons they came up with it originally still apply and don't get better for next gen, they get worse.

THAT SAID - I also think an interesting question is if MS chooses to copy themselves (the 360)/ copy Sony and make the cheaper sku not based on the cpu/gpu/ram next gen SHOULD devs say they would rather other options for a cheaper box go through (and no, current statements we have on record are not good evidence of anything).

My personal 'fear' is that MS will focus more on mobile (game streaming) to go after that much more lucrative market, the one where all the growth is nowadays. After the ActiBlizzKing deal I expect the focus to shift more towards the mobile and the tv side, game pass on everything. MS scrapped their first gamepass streaming stick (Keystone) but only because they can't reach their intended price point yet. Next gen it will probably be there. Question is will there still be a premium console from MS next gen.

Perhaps MS is also looking to develop a TV OS or maybe buy one of the available ones and integrate game streaming. No stick is always better, but TVs aren't fast enough yet for low latency game streaming.

I do hope MS keeps pushing back against Sony in the hardware and AAA gaming market as well. Nobody wants early PS3 Sony to come back. But we do still need powerful standalone hardware to allow the VR market to grow, for at least another generation. Perhaps after next gen mobile hardware will be small and power efficient enough to provide the full experience in just the headset alone. For now VR visuals are still far behind (will get better with eye tracking and foveated rendering) with bulky headsets that don't leave many options for power hungry heat producing hardware.

We knew through rumors and leaks but Series S's existence was only made official some two months before launch. Series X on the other hand was announced like a whole year before launch.

I think $300 is guaranteed for PS5 "Digital Edition" as this is shaping up to be a super long generation. $250 is also possible during holidays (if not, then $300 with a free game). Depending on how long Microsoft will actually l support the Series S, I can see it going down to $200 (+ a free game in the holiday season, or an additional controller, or several months of free GamePass etc) but I don't see it going lower.

1. Sony can choose to reduce the SSD capacity, saving a few $. Series S can't match because the capacity is too small as is, and GamePass (the main selling point) skews to higher capacity demand. Do keep in mind that game sizes are also generally smaller on PS5.

2. PS5 selling a lot more than Xbox can enable Sony to pay chip makers less for more. Xbox reportedly never made money from hardware.

3. GPU and RAM are the main cost differentiators between PS5DE and Series S. The initial gap in price was only 25%. In a hypothetical scenario where MS and Sony intend to have similar profits/losses per unit sold, this percentage should drop over the years. Series S only dropped in price because MS is willing to take greater losses to maximize sales. Sony currently doesn't need that, because they're selling all they're producing. But they may pull the trigger when production exceeds demand.

4. Sony are transitioning to smaller die sizes quicker than Microsoft. They've already switched to 6nm months ago, and are reported to go 5nm and launch a cheaper and smaller model in September. This saves costs and improves production. Microsoft is yet to transition to 6nm. I'm aware that there are more complications, but it is something to consider.

5. Sony is reported to produce over 30 million PS5's for the next fiscal year, 18.5 million of them are the revised units for the 2nd half. Pretty sure that would be a record breaking 2nd half for any console. Who knows how many units they'll be able to produce in fiscal year 2024 (GTA6's year)?, but no matter how many, they will NOT be able to sell them without pricedrops + a push for the new "Digital Edition". 25 million+ could be a tall order even with prices drops. Production reports are factored into my price expectations.

As for Microsoft's decisions. I'm conflicted about this because the pandemic did wonders to the Series S, so in that sense they did make the right call. But I think the worst for them is yet to come because PS5 might soon be available in very large quantities, and the transition to current gen only games will gradually introduce problems for Series S and make moneyhatting easier for Sony ("You're having trouble making this work on the Series S? Don't fret! We'll pay you for the uncompromised version! In return, skip Xbox and put it on PC") which may very well be the case for Silent Hill 2 Remake whose minimum PC requirements (not final I'm assuming) show that it's thee most demanding PC game of all time. There will be more and more cases like Silent Hill 2 unless Microsoft drops the Series S as a requirement. This is speculative on my part but it's difficult to discuss this without venturing into speculations and assumptions. I hope no one mistakes this as me saying SH2R "definitely" isn't coming to Series X/S.

Now I'm not denying the chance that when all is said and done, this could still end up in Microsoft's favor (compared to if they had gone for a PS5-like "one model, two configurations" strategy). Too many scenarios and possible outcomes to go over. For example: even if Microsoft decides to eventually ditch the original Series S in favor of an improved Series S+ with more RAM and GPU power, it's possible that the majority of Series S owners would be okay with this, accept Microsoft's apology and upgrade to the Series S+/X/X+ etc because GamePass is just too good for them to pass up. If anything, this could make Xbox ownership per user notably higher than PS5's.

I initially thought the name "Series" suggested an end to the concept of generations for Microsoft (which lined up with a Microsoft representative laughing at the term "generation" shortly after One X's launch), and that they were taking a PC-like approach where they don't force developers to support their weaker/older consoles in the "Series" family. But then Micorsoft insisted that the Series S would be fully supported/required throughout the entire "generation". It's hard to see where this is going but personally, I predict Microsoft will eventually make the difficult decision to ditch (as in "not mandating") the Series S before the generation ends, because not ditching it would put them in a more difficult situation.

Anyway... 2023 should answer a lot of questions and will probably change a lot of predictions including some of my own.

Considering how fast the computer performance moves forward right now, I think a mid-gen refresh is practically inevitable if they want to keep the generation going for longer than just 6-7 years.

The Ryzen 6000 mobile chips are already dangerously close to the series S in terms of performance (both CPU and GPU) and I'm fairly sure that by 2025, even the PS5 and XSX will be getting in range of AMD's APUs.

Raytracing is a weak point of AMD GPUs so far, and will probably only get really better with RDNA4. Since Raytracing is growing in the AAA space and consoles are mostly left out of it so far, I expect a mid-gen upgrade when those GPUs are getting released in 2024. Right now, the performance increase from RDNA2 to RDNA3 ain't big enough to avail a mid-gen upgrade for the big consoles, though a refresh with a die shrink is not out of question.

This is all true for the big models. The Series S however could benefit already from an upgrade: It's too weak anyway for Raytracing and even for non-raytraced games, it's performance is increasing limiting and not helped by the slow and small amount of memory. Upgrading the series S could give about 50% more performance if done right for the same TDP, making the system much more viable for the next years. The main question is if the price increases at TSMC would make the console more expensive and thus not worth it from a business perspective or not.

I kind of hope that there is a mid gen refresh tbh. Super happy so far with the performance of the series X but... If better is out there... Trade in, decent upgrade for a couple hundred is quite enticing.

No one builds games to the metal anymore. Not even first party titles.

It makes sense to build your games/engines to scale upwards and downwards to match the hardware (In-fact, it's technically always been a thing anyway, even back in the 90's with Glide/OpenGL/DirectX render paths.).
 
Especially as games these days often get "remastered" in a generation or two's time anyway. Easy money.

No. Sony chose to reduce the SSD capacity, because they made their SSD faster, by building a wider NAND interface... So it was a cost cutting measure.

Sony is likely spending roughly the same amount as Microsoft for their SSD, but chose to sacrifice capacity for speed.

Game sizes are smaller due to a myriad of factors... Less games are built to install on Playstation 4 and Playstation 5 simultaneously, they release a variant specific for each platform... Or run the PS4 version in backwards compatibility mode on the PS5.

Compression.

Localization.

And such.

No one can pay TSMC more money, for more chips.

They are at capacity.

The only way to get more chips is by making smaller chips so you can get more chips per wafer.

Keep in mind that "7nm and 6nm" are actually just advertising numbers, they don't actually represent the geometric feature sizes of transistors on a silicon wafer anymore.

TSMC's advertised "6nm" is actually 7nm+ or 7nm EUV. It uses identical design rules, just denser rooting libs... And not all logic scales the same, if you are SRAM heavy with your chip, it -will- be cheaper to stick to 7nm.

There are advantages to TSMC's "6nm" but it's not a night and day difference, Microsoft may have a contract in place and the cost to move to 6nm may override any tiny cost saving.

That... And TSMC is at capacity, they simply may not have any capacity available.

The real jump will be at 5nm.

Sony and Microsoft are also not the ones shrinking these chips... That is actually AMD and TSMC as the technology is propriety, Microsoft and Sony just hand over a contract/cheque to get the job done.

Some Ryzen 6000 mobile chips are definitely better than the Series S on the CPU front already.

The 6980HX based on Zen 3+, 3.3Ghz-5Ghz, 16MB L3 cache kinda makes the Series S 3.4-3.6Ghz Zen 2, 8MB L3 seem whimpy by comparison.
Plus the move from Zen 2 to Zen 3 had 19% more performance at the same clock...

Series S has a 20CU/1280 Shader GPU @1.565Ghz fed by 224GB/s of memory bandwidth... Which places it in the same rough ballpark as a GPU sitting just below the Radeon RX 6500XT. (Mostly thanks to Infinity cache and 1ghz higher core clock that is.)

None of AMD's APU's in the PC space have a GPU with the memory bandwidth that can match the Series S... So in order to get "competitive" results you need to cut back on features that gobble up fillrate/memory bandwidth and push up effects that suck up compute time instead.

The Series S is a very low-end device by PC standards... Heck the Xbox Series X/Playstation 5 is mid-range... But that also doesn't say much as the PC high-end has climbed a few tiers (and cost) over the past decade... Does mean we will need mid-cycle refreshes to keep consoles competitive with mid-range PC gaming.