Sony’s losses stand at $4.5 billion for the PS3 generation. Microsoft, in contrast, has lost about $2.6 billion. These figures run contrary to what a lot of people believe, MS and Sony have both talked up big years and big quarters but when you consider the enormous expense of development, the math doesn’t lie.
Nvidia vs AMD
The reason this comes down to margins, not technology, is because Nvidia has been working on its own CPUs for quite some time. No, previous Tegra processors weren’t powerful enough for consoles at this price point (the $99 Ouya is a special case), but NV could likely have whipped up a Tegra 4-class processor in time for the PS4's launch. It’s easy, meanwhile, to imagine a Kepler-based console GPU — the chip’s excellent performance-per-watt makes such an application a no-brainer.
In the end, AMD was probably willing to take a much smaller margin than what Nvidia wanted. Part of that was undoubtedly cost related, AMD was already planning to build SoCs that combined console graphics hardware with its own CPUs. Mostly, though, it reflects the relative desperation level of the two companies. Unlike Nvidia, AMD is counting on this SoC business to survive. Rory R. has stated he expects semi-custom SoCs ( consoles/tablets) to account for 20% of AMD’s revenue.
Even after factoring in AMD’s diminished expectations for 2013, a shift that large would reflect hundreds of millions in royalty payments, but it’s predicated on strong tablet sales, strong next-generation console sales, and any remaining payments owed by MS and Sony related to meeting launch windows. At this point, with the Wii reportedly selling far below Nintendo’s expectations and the x86 tablet market is pretty limp, that prediction looks increasingly optimistic.
These trends could hit AMD, and hit it hard. Sunnyvale is depending on strong sales from consoles. If console sales don’t spike in the back half of this year or early next Nvidia may end up having made the smarter choice.
Console manufacturer take a loss on each console but make it up in accessories, game licensing, and online subscriptions..
Component manufacturer such AMD profit. AMD has very high margin right now as GF has cut them an amazing deal. AMD doesn't need to maintain or expand a fabrication company anymore either which is great for share holders as we don't have to see it on reports.
it's time you covered your short and went long. You'll be glad you did when we are at $3 PPS in April.