Business Approach Comparison Sony PS4 and Microsoft Xbox

[Jwm]

So, who's going to win?

We haven't seen anything on Ps4's services and end user experience which is what MS was all about. I see a clear distinction between target markets. I expect Sony to win a lot of core gamer interest, but will Ms end up with more sales/revenues/profits in the long run?

PS4 has to sell these other features during E3, so that part of their approach will catch some flak I am sure.

MS has an interesting box overall, but still some features were hinted and not shown. My son will like both the DVR game functions, he loves to record his minecraft sessions with our phone. He will also play Halo Forge mode just to make movies (at least in his mind).

So while this is a feature I really don't need, it will not be lost on him. And I get my phone back!

I think they are both living room boxes, just the marketing aspects will be different. MS just needs to hire Apple at this point.

 

[wco81]

Netflix will probably be one of the most popular features still.

And there will be some new killer app. that hasn't materialized yet.

Again, if MS ties the TV interface to some service which requires a subscription, it's a non-starter, unless the core gamers were already paying for their XBL and gets these features included.

Now, Sony will also have to support Netflix and other video content delivery but will they start charging for PSN this time? If they put Netflix behind a paywall, well there's always Apple TV, Roku and all the TVs and Blu-Ray players these days that will run Netflix, Hulu Plus, Vudu, etc.

Nobody is buying a console just to watch videos and they're certainly not going to pay extra to watch Netflix. They may pay for online gaming and if Netflix is included, fine. But to pay extra?

 

[James Car]

So, who's going to win?

We haven't seen anything on Ps4's services and end user experience which is what MS was all about. I see a clear distinction between target markets. I expect Sony to win a lot of core gamer interest, but will Ms end up with more sales/revenues/profits in the long run?

I think that's a big assumption that Sony cannot replicate much (all?) of what was shown for casual / nongamer functionality. The only hardware change (if any) necessary would be a hdmi input for overlaying information.

Once that is complete, the only thing keeping Sony from duplicating MS efforts is their willingness to develop the software.

That's it.

I think bottom line that is their ace card. The fact that Sony's APU may end up smaller (cheaper) tells me that there will likely not be a price advantage for MS. Same price for a better product should bode rather well for Sony with core gamers. Add the fact that core gamers are generally tech influencers in their circle of friends and this should lead to a sizable increase in marketshare for Sony over ps3. If after a few years (worst case scenario) Sony can match the non-gaming features of MS, then this is a case closed deal. By that time, the price will be cheaper and more appealing to the casual/non-gamer crowd anyway and the box will likely be smaller/cooler as well.

Core gamer first. That is step one in a successful strategy in the console realm.

 

[James Car]

...I'm as much awed by great graphics as the next guy on here, but persistant worlds in many games would IMO sound quite exciting.

This is true that intriguing possibilities could come from this way of doing things, but it would require developer investment at a time when they are more likely than ever to code to one generic baseline as a means of cost control rather than splurge on one platform which in all likelihood will have an uphill battle with gamer userbase...

 

[James Car]

PS4 has to sell these other features during E3...

If I were in Sony's executive shoes, and I knew our team had the capability to showcase similar features to those shown by MS, I'd casually integrate them in the midst of the rest of the presentation which heavliy focused on games. It would drive the point home that the console is squarely gamer centric and that MS has serious competition on nongamer functionality as well.

 

[AzBat]

GIven how the XB1 is being positioned, I cannot see it being priced over $399 as a family living room device. I cant think of any similar device in the past that has sold in any relevant quantities that has sold for over that amount.

Do you still think that Kinect is cheap piece of kit & can't command more than $150(the original a la cart pricing of Kinect 1) if it was being sold separately? Due to the newer tech in the device, I can conceivably see Microsoft thinking that the console itself is worth at least $300 & the Kinect sensor being worth at least $150. As much as I want the system to be $400 I don't think they would have any problems selling it at $450 or more.

Tommy McClain

 

[dobwal]

I am sold on the tv integration but then my choice usually involves what console gets purchased first and at what price. So I am all for greater differentiation between between products.

My feeling when it comes to employing cloud computing for gaming is that MS better make it as plug and play as possible because devs aren't going to invest much into features that aren't applicable across ports if they require too much time and effort to implement. otherwise, those features will be limited to first and second party titles or would require MS to provide resources to third party for inclusion.

Also, I think MS is going to have to dish out a lot of capital in the form of marketing partnership and development investments, if it wants to influence core gamers enough to keep Sony from dominating in that area.

 

[James Car]

Do you still think that Kinect is cheap piece of kit & can't command more than $150(the original a la cart pricing of Kinect 1) if it was being sold separately? Due to the newer tech in the device, I can conceivably see Microsoft thinking that the console itself is worth at least $300 & the Kinect sensor being worth at least $150. As much as I want the system to be $400 I don't think they would have any problems selling it at $450 or more.

Tommy McClain

There is some serious kit in the box for kinect2. That is undeniable.

Having said that, how much of this is replicable with two 1080p webcams as we are likely to see in ps4?

If MS cannot demonstrate a clear advantage in their system vs pseye4.0, then the investment becomes an anchor on the msrp.

 

[James Car]

My feeling when it comes to employing cloud computing for gaming is that MS better make it as plug and play as possible because devs aren't going to invest much into features that aren't applicable across ports if they require too much time and effort to implement. otherwise, those features will be limited to first and second party titles or would require MS to provide resources to third party for inclusion.

Spot on.

Devs already have it easier on ps4 with one fast pool of gddr and more CU's. MS will have to pay a good chunk to get devs to utilize any cloud based compute on top of the memory management necessary and less gpu resources that they have to deal with.

To your last point, MS will have a near impossible time capturing hardcore gamers at this point. It would take something HUGE to make up for all the hurdles they placed in front of themselves.

Even if they had the exact same hardware as Sony at this point, they would still need to battle the perception that MS is going DRM heavy and privacy invasion 9000 on top of the paid xbl service and ever increasing advertisements...

MS really needed to invest heavy with the hardware to get core gamers to buy in. This would have given them some leeway with pushing drm, privacy and advertisement concerns. As is, there is very little to attract core gamers to the platform which can overcome the many negatives at this point.

 

[AzBat]

There is some serious kit in the box for kinect2. That is undeniable.

Having said that, how much of this is replicable with two 1080p webcams as we are likely to see in ps4?

If MS cannot demonstrate a clear advantage in their system vs pseye4.0, then the investment becomes an anchor on the msrp.

No idea about the technical capabilities of the PS4 camera, but one would think that if they could do all that they showed in that Wired video with 2 simple webcams they would have went that direction instead. No?

Tommy McClain

 

[James Car]

No idea about the technical capabilities of the PS4 camera, but one would think that if they could do all that they showed in that Wired video with 2 simple webcams they would have went that direction instead. No?

Tommy McClain

I'm sure kinect2 should be more capable, however will it be something which is clearly more capable to the consumer? Or will they see both having motion controls and call it a day?

 

[ERP]

I'm sure kinect2 should be more capable, however will it be something which is clearly more capable to the consumer? Or will they see both having motion controls and call it a day?

We still don't have confirmation that PSEye is in the box on PS4 do we?
Either way I think that will come down more to the overall experience and less the actual hardware.

 

[dobwal]

MS really needed to invest heavy with the hardware to get core gamers to buy in. This would have given them some leeway with pushing drm, privacy and advertisement concerns. As is, there is very little to attract core gamers to the platform which can overcome the many negatives at this point.

Ask many of the PC gamers here who still console game if graphic is the only reason why they purchase consoles. Software exclusivity matters and is an area where MS can invest and minimize Sony's hardware advantage.

If MS can grab 2-3 key third party exclusives and manage to produce a couple of must have first party franchises, it could have positive impact among hardcore and core gamers.

 

[dobwal]

There is some serious kit in the box for kinect2. That is undeniable.

Having said that, how much of this is replicable with two 1080p webcams as we are likely to see in ps4?

If MS cannot demonstrate a clear advantage in their system vs pseye4.0, then the investment becomes an anchor on the msrp.

If Kinect and the features that incorporates it finds very little traction with the majority of users and potential purchasers, MS always has the option of breaking it out and selling a cheaper sku that lacks Kinect. MS is probably going to have to clearly highlight that sku's limitation but unless Kinect is heavily used, the impact of removing it will be minimal.

Ultimately how well Sony and MS executes their business plan will determine who may garner more market share. MS's one year advantage, Sony's lack of software during its first year, and Kinect played heavily into the 360's hand. I think Sony should be prepared to throw a lot of capital at third party developers.

MS is not calling their new console the Xbox One for no reason, they are basically resetting their product line. I think they understand that they are starting over a bit, so those things that won them favor in the past are going to be needed to win people over again.

 

[Shifty Geezer]

Sounds like you feel that Sony has more pricing flexibility with the PS4 than XB1? How did you derive that?

Depends entirely on how much each company is willing to lose selling hardware, but I'm thinking Sony's BOM is a good lot cheaper than MS's with smaller APU (half the size) and no Kinect 2, partially ameliorated by GDDR5 cost. IIRC the GDDR5 discussion suggested the increase to Sony wouldn't be too much, and that should drop dramatically. Price of Kinect 2 I'm guessing won't drop anything like as much given the lack of general adoption of TOF cameras! I may be wrong, but it seems to me maybe Sony have a good $100 in hand to either take in profits or spend on something or lower the price to undercut the competition.

I think that's a big assumption that Sony cannot replicate much (all?) of what was shown for casual / nongamer functionality. The only hardware change (if any) necessary would be a hdmi input for overlaying information.

Oh no, that wasn't my suggestion. Sony can and will replicate some non-gaming utility features (although how well remains to be seen, but Sony failed utterly on my hopes for PS3 and their execution has been very spotty). My point is how the hardware was targeted. Sony clearly aimed for the gamers first and foremost, in contrast to their PS3 targeting which was, "oh, er, kinda everyone, really," a message that they failed to communicate effectively until they hit upon the "it only does everything" strategy. Sony want gamers to buy in the beginning and the platform will grow from there.

MS was targeting at CE users, leaving the games as the second place consideration, the, "oh yeah, is does that two," aspect to their platform. And these different strategies reflect in the design and execution of the consoles. MS made choices to favour the living room experience, whereas Sony made choices to favour the core gamer (and game developers, the crux of their reveal, lots of games because they are easy to make).

 

[James Car]

Software exclusivity matters and is an area where MS can invest and minimize Sony's hardware advantage.

If MS can grab 2-3 key third party exclusives and manage to produce a couple of must have first party franchises, it could have positive impact among hardcore and core gamers.

It could have an impact. Nobody can predict the next gta or call of duty.

However, Sony has a big time advantage with developers in house as well as 2nd party. Add to that the canvas that Sony provides to 3rd party devs is a bit bigger with better brushes, and I'm seeing another uphill battle for MS.

 

[expletive]

Do you still think that Kinect is cheap piece of kit & can't command more than $150(the original a la cart pricing of Kinect 1) if it was being sold separately? Due to the newer tech in the device, I can conceivably see Microsoft thinking that the console itself is worth at least $300 & the Kinect sensor being worth at least $150. As much as I want the system to be $400 I don't think they would have any problems selling it at $450 or more.

Tommy McClain

Well, it doesn't have a motor anymore. A lot goes into a $150 retail price though and I have no idea what MS' costs were for it, only that they felt they could charge $150. Consumers have been conditioned for gaming consoles to to cost $399 (or $499, $599) because over time they've been calibrated as such. For MS to be able to sell this box for over $400, they need to convince people that it gives up nothing in terms of gaming, which we know isn't the case.
While the single input machine is something that interests me, its CLEARLY a luxurious nice-to-have for vast majority of people who spend less than a few hours a day sitting in front of the TV.

Depends entirely on how much each company is willing to lose selling hardware, but I'm thinking Sony's BOM is a good lot cheaper than MS's with smaller APU (half the size) and no Kinect 2, partially ameliorated by GDDR5 cost. IIRC the GDDR5 discussion suggested the increase to Sony wouldn't be too much, and that should drop dramatically. Price of Kinect 2 I'm guessing won't drop anything like as much given the lack of general adoption of TOF cameras! I may be wrong, but it seems to me maybe Sony have a good $100 in hand to either take in profits or spend on something or lower the price to undercut the competition.

Oh I must have missed the whole 2x size of the SOC discussion. Is that due to transistor count or the fab process?

 

[Tchock]

Same doubts regarding SOC size. If anything the One's SOC itself should be a smidgen smaller than the one on the PS4, with an extra ESRAM chip to settle (it's still a multi-chip module like the 360, right?)

In fact I've been thinking that MS would be able to undercut costs vs the PS4 launch-side: I think the Kinect tech is much less bespoke this round (no motor, single 1080p sensor - now how many of those does Omnivision make? etc) - and most of the costs are actually fixed and sunk into design and R&D instead, making pragmatic choices so that it can come bundled with the console. (This isn't a separate CE product anymore with its own margin breathing room- and I bet they're aware of that)

 

[Xenus]

If it was multichip there would be little point to use ESRAM. So I bet it is a single SOC. It looks like Microsoft will likely have a higher starting BOM but due to the ESRAM can probably end up cheaper in after a few shrinks.

 

[Shifty Geezer]

Oh I must have missed the whole 2x size of the SOC discussion. Is that due to transistor count or the fab process?

MS said they spent 5 billion transistors on processing, including 1.5 billion on ESRAM by my back of the calculator reasoning (32 MB x 8 bit x 6 T per bit). I probably over-estimated the difference in chip sizes. Caught up in internet talk and not checking stuff for myself.