Anything that isn't in the super luxury market (Ferrari, a trip to a 5 star hotel in Abu Dhabi, premium high end A/V equipment, etc.), is a result of "penny pinching."
Although in real world speak, it's just the process of setting a realistic budget according to your product goals and then making the best product you can with it. Outside of high end luxury items, everything is produced on a budget.
When the budget + item >= projected demand, then you have a successful product. If it barely meets it (PS3/X360) then you have a somewhat successful but overall disappointing product (from a business standpoint), but at least it isn't a failure. But at least MS could claim good things out it as they greatly expanded their market presence compared to the first product. Sony on the other hand? At least it wasn't a complete failure when compared to the previous product. And financially it's a good thing it wasn't a complete failure. They did a fantastic job of turning things around after the first year or two. But that return on investment is likely painful to see on the balance books. However, they did manage to win the HD optical format war, so that's something for them to feel good about. But that investment into Cell is just as big of a downer as winning the HD optical format war was an upper.
Both Sony and Microsoft want higher profits from this generation than the PS3/X360 generation. To do that they cannot just do the same thing over again. Hence, both companies are going to be attempting to expand the potential market for their console.
PS3/X360 generation showed that creating a console purely for the "core" gamer isn't going to get you the high return on investment that it could in previous generations. Although it was high risk (failures were common...Sega, Atari, etc.).
But while the high risk is still there. The high rewards haven't been for this current generation. Other than for Nintendo for the first few years due to the fad like nature of their offering (just like Cabbage Patch dolls and other such market phenomena). But at least neither company is completely oblivious. While they are reaching out to those people that bought into the Wii at the start of its life, they aren't relying upon it. Both still focus on core games, but with an expanded mindset to encompass more than the core games.
Regards,
SB
I don't want to derail this thread or veer offtopic, but I think it's important to understand the past to understand where things are headed in the near (and longterm) future.
While I understand what you're saying wrt budget, it should be noted that neither xb360 or ps3 were "victims" of their silicon budget. They weren't the reason that either company was bleeding red uncontrollably.
PS3 loss was due to heavy R&D and investment into new experimental tech (cell) and using their brand equity as a trojan horse for what they perceived to be their next cash cow (bluray).
Xb360 was due to poor engineering design (imo) and lead free solder.
For reference, take a look back at ps2's die budget.
Now getting into the notion of expanded marketshare. As I've illustrated in the past, low(er) price does not equate to high(er) demand (see Gamecube, Dreamcast, Jaguar, Gamegear, etc).
Doing things which were impossible prior to your new widget,
that creates demand. There are many avenues to get to this wizbang wow impression, but rarely is that possible without the compute resources necessary to enable it. Wiimote was a RARE exception.
The two or three big ones on the horizon are HD kinect/move 2.0 (finger tracking, low/no lag, eye tracking, etc), vr headset (hi res, hi framerate, lag free and accurate headtracking), & illumiroom (expanded rendering of the existing frame).
All of these are features which
can expand the demographic, but they all require additional compute to get it done in a way which offers an attractive experience. By that I mean it isn't a feature which is a turnoff because it isn't executed properly. Some (myself included) might argue that kinect suffers a bit from this. To some consumers, they may be turned off at the mention of kinect 2.0 because of the poor experience they had/have with kinect 1.0. Either the lag is too much, or the resolution is too low, or both.
Point is, with proper execution and compute resources, this impression wouldn't be the case. Some will always have negative feelings for motion control, but having a positive experience which doesn't exhibit these technical limitations can lessen this negative reaction.
So, with the emphasis on expanding the demographic, I'd argue the exact opposite approach is in order.
Understanding that the demographic which is already onboard (core gamers) is looking for an upgraded experience and the ones which did not jump in this gen, obviously didn't feel enticed enough to purchase based on what they've seen, heard, or experienced, I'd say they too are interested in a ps360+ experience or just not interested in games. But to entice them, the experience obviously needs to be head and shoulders above ps360 as ps360 clearly wasn't enough to lure them in!
So we have a baseline experience of the core game needing to be head and shoulders above ps360 (expanded market and core gamer both demand this, otherwise they'd buy and or stick to ps360) AND on top of this base experience, the systems also need to have compute headroom to accomodate one or all three of the above mentioned "extras".
It's important to remember that it isn't just ps360 which the new boxes are competing with, but also tablets and smart phones. The weaker these boxes are, the easier it is for mobile devices to compete with them and draw attention (and dollars) away from them. Form factor is one of the advantages consoles have to combat this, but only if Sony/MS take advantage of it.
Now granted, the above will eat into some profit margin as more powerful hardware isn't free and neither is the cooling solution. Having said that, the potential profits far outweigh the costs.
Consider that the ps2 and xb360 had similar silicon budgets and both retailed for $300.
Both did lose money upfront, but as this gen has moved on, there are more and more avenues for profit other than just hardware or games.
Point being, if we take those two examples as base silicon budget targets and bump the baseline msrp for inflation ($400 is fair) while also accounting for psn/xblg potential profits, along with potential ad revenue, along with potential search ad revenue, it becomes clear that the risk for a silicon budget at or near ps2/xb360/ps3 levels is not high. In fact, I'd venture to say the risk is on the other end.
Introducing a box which has negligible benefit over the existing box is a risk. This is an across the board risk. Core gamers could shun the offering, and this "expanded market" could turn on the thing before it even hits the shelf (wiiu anyone?).
I'd venture to guess a box with a similar silicon die budget to ps360 would net a total BOM of $400-$450. This is pretty much what I'd expect the nextgen to retail for.
Now factor in the increased revenue from online purchases, subscriptions, ads, search, and eventual hardware profit and THIS avenue seems to me to be the most low risk of all.
Time will tell.
Of the two, it seems Sony is a bit more on my side with this train of thought (although still well under last gen die budget). We'll see what the end result is, but at this point, I'd venture to say Sony will see more success if their hardware shows the type of advantage I'm expecting to see.
It's easy to make a good heat sinking in a small space, it's difficult to do it for cheap. If they would have gone with a 250W beast for next gen, the cost would have been high, and require a lot of copper and aluminum. The choice is either spend maybe 20$ more per console for good heat management, or make the console less powerful, or risk another RROD fiasco.
