We sez: "Future Console Revisions - 360, Wii and PS3"

[Farid]

Since I suspect that a lot of you folks do not check the frontpage as much as you all should (I don't know, at least once. Yeah, just once would be great for a start.)
I decided to bring this article forth, for all the Console folks to see. An article from one of the rare, still living, Australian who can both argue that he lives in Austria, not in Australia and, also, speak Japanese --all that at the same time. I'm talking about Hupf, of course, and not about the governator during the shoot of one of the, Japan only, corny commercials he starred in.

http://www.beyond3d.com/articles/futureconsole/

It's mostly a translation of Goto's speculative article from the other day, but it also contains some home made speculation from Uttar's, Hupf and Rys.
In other words, it's just a quickly put together feature for those who like all this speculation concerning semiconductor processes and incoming revisions of already available hardware.

 

[AlNom]

I read it when it came out, but thanks for the reminder. It's a good article, but I'm just curious: Are there any thoughts on Xenon? And what would it take to get CPU/GPU integration for all three systems?

 

[Arun]

Are there any thoughts on Xenon?

Well, right now it's manufactured at both IBM and Chartered. You'd expect Chartered to be slightly cheaper - so eventually, all or at least a vast majority of the product would be done at Chartered. I'd assume that to be true as early as in the 65nm generation, which should be in mid 2007 iirc. I'm not sure if this is what you're thinking of, though...

And what would it take to get CPU/GPU integration for all three systems?

For the Wii, I don't think it makes any sense. The GPU uses an exotic process for 1T-SRAM, while the CPU uses another process with SOI. So, integration looks like a no-no to me, unless they'd redesign the whole thing a bit - which they're unlikely to do mid-gen.

As for the PS3 and XBox360, the article is clear enough, I guess! It remains to be seen how the XBox360 handles the EDRAM, but it's perfectly possible for the CPU and GPU to integrate while keeping a separate chip for the EDRAM.


Uttar

 

[Corwin_B]

Thus, Goto expects to the costs difference between Wii and Xbox360 & PS3 to shrink, as well as the price difference.

Will it really matter, though ? The big difference between Wii and PS3/360 is that right now, the Wii is profitable. Their first price cut likely will be offset by unbundling Wii Sports (which many people will probably buy separately), and the Wii is likely to hit the various important price points ($199, $149, $99) before the competition, perhaps even still turning a profit (IIRC, the GC was profitable at $99 bundled with a game at the end of its life, without any CPU/GPU integration or smaller process).

Considering the huge money pits that the 360 and the PS3 (especially the PS3) are right now, I expect Sony and MS to reduce price very reluctantly at first. Also, the PS3 has incompressible costs in form of the HDD present in all SKUs. They can increase its size at a constant price over time, but have to include one in each PS3. That was one of the reasons the XBox 1 bled money throughout its life, IIRC.

 

[Arun]

the Wii is likely to hit the various important price points ($199, $149, $99) before the competition, perhaps even still turning a profit

It would be extremely sad for Nintendo if either of those things didn't turn out to be true.
What it does mean, however, is that by the time the Wii costs $149, it's likely the 20GB PS3 might "only" cost $249 or so. The difference would then be shrinking in both absolute and relative terms. Same fro the XBox360. This isn't huge by itself, but it certainly is strategically significant anyway, imo.


Uttar

 

[Corwin_B]

What it does mean, however, is that by the time the Wii costs $149, it's likely the 20GB PS3 might "only" cost $249 or so.

I really don't see that, unless the PS3 tanks beyond belief. Sony is already bleeding money on those, and has extremely large R&D investments to make up. Sony will probably be forced to follow the 360 price drops in order to maintain the price difference with the Core and Premium, but would be crazy to try to follow the Wii pricepoint.

Nintendo managed to get the Cube to $99 while the competition was still at $180, and technology was much closer between the different machines last gen.

If Nintendo can afford to still be at $149 when the PS3 finally reaches $249, it will probably be because they have such a lead that they can price their Wiis as they please and still sell every single one of them (like the DS Lite).

 

[AlNom]

Well, right now it's manufactured at both IBM and Chartered. You'd expect Chartered to be slightly cheaper - so eventually, all or at least a vast majority of the product would be done at Chartered. I'd assume that to be true as early as in the 65nm generation, which should be in mid 2007 iirc. I'm not sure if this is what you're thinking of, though...

For the Wii, I don't think it makes any sense. The GPU uses an exotic process for 1T-SRAM, while the CPU uses another process with SOI. So, integration looks like a no-no to me, unless they'd redesign the whole thing a bit - which they're unlikely to do mid-gen.

As for the PS3 and XBox360, the article is clear enough, I guess! It remains to be seen how the XBox360 handles the EDRAM, but it's perfectly possible for the CPU and GPU to integrate while keeping a separate chip for the EDRAM.


Uttar

Thanks for the reply.

I suppose I was leaning more towards..."At what process would it be feasible/cost effective to integrate the CPU/GPU?" (I should have clarified ). Particularly for the Wii, would it be of any advantage to have both dice on a single package (sister dice) since the chips are already quite small and further reductions would make them quite "elfin"?

Any speculations for the very far future? South Bridge integration? Too many pads/pins?

 

[Natoma]

It would be extremely sad for Nintendo if either of those things didn't turn out to be true.
What it does mean, however, is that by the time the Wii costs $149, it's likely the 20GB PS3 might "only" cost $249 or so. The difference would then be shrinking in both absolute and relative terms. Same fro the XBox360. This isn't huge by itself, but it certainly is strategically significant anyway, imo.


Uttar

In absolute or even relative terms, that makes no sense to me. A drop from $250 to $150 would be 40% for the Wii. A drop from $500 to $250 would be a drop of 50% for the PS3 20GB version.

The pricing, particularly given what we know of the money Nintendo makes on each console vs the money Sony loses on each console, would be magnified even moreso in Nintendo's favor. I just don't see Sony dropping to a price of $250 anytime soon unless they're willing to make their losses in the short term even more significant.

 

[Shifty Geezer]

The pricing, particularly given what we know of the money Nintendo makes on each console vs the money Sony loses on each console, would be magnified even moreso in Nintendo's favor. I just don't see Sony dropping to a price of $250 anytime soon unless they're willing to make their losses in the short term even more significant.

Sony's losses will drop far faster than profits on Wii will increase. Given a switch to 65nm, and ramping up of BRD drives, PS3 could shed maybe $200 in a year. Nintendo aren't likely to see many cost-saving opportunities over Wii's life because the tech is already established at low-cost production. Thus in the time Sony have saved 50% on their BOM, Nintendo may only save 20%. And when Nintendo have managed to save 50% on its original BOM, PS3 might be saving as much as 80% on theirs. I don't know how the figures will pan out, but it all depends on how prices drop as technology matures, and what the minimum expenses are. eg. eventually a BRD drive will be as a cheap as a CD drive, as netiher device can be made any cheaper. PS3's prices have much more room to drop and at a far higher rate.

 

[StefanS]

In absolute or even relative terms, that makes no sense to me. A drop from $250 to $150 would be 40% for the Wii. A drop from $500 to $250 would be a drop of 50% for the PS3 20GB version.

The pricing, particularly given what we know of the money Nintendo makes on each console vs the money Sony loses on each console, would be magnified even moreso in Nintendo's favor. I just don't see Sony dropping to a price of $250 anytime soon unless they're willing to make their losses in the short term even more significant.

It's not about short-time price cuts. It's about future revisions, e.g. 45nm in 2009. If you look at the architectures, there's much more potential to cut costs in PS3 / Xbox 360 compared to Nintendo's Wii which is already a pretty much streamlined / simplified architecture. Moreover, while Wii will benefit mainly from die shrinks, the other consoles will benefit from architecture simplifications and the shrinks. Moreover those shrinks will be a much bigger cost reduction factor for them given the die sizes of the chips in PS3 and X360.
All that will lead to the cost and the price gap being reduced. ATM, the gap is 350 USD / 150 USD for Wii-PS3 (premium) and Wii-X360 (premium) respecitively. It won't stay that wide.

 

[AlNom]

Considering how long the 360 has been out, MS will likely be the first to drop price, but how much? Keeping in mind that they aren't necessarily competing with the Wii and also that Sony isn't likely to drop price very soon, so perhaps we'll see more conservative price drops such that the move to 65nm or 45nm would not be "negated" entirely or overshot.

 

[StefanS]

Considering how long the 360 has been out, MS will likely be the first to drop price, but how much? Keeping in mind that they aren't necessarily competing with the Wii and also that Sony isn't likely to drop price very soon, so perhaps we'll see more conservative price drops such that the move to 65nm or 45nm would not be "negated" entirely or overshot.

Well, considering the fact that 65nm has been somewhat delayed and everyone expects the first MS price drop before E3, I'd guess we're going to see a price drop of the bundles to 350 USD or 360 USD, depending on the marketing department . That's however just pure guess work.

 

[Natoma]

Sony's losses will drop far faster than profits on Wii will increase. Given a switch to 65nm, and ramping up of BRD drives, PS3 could shed maybe $200 in a year. Nintendo aren't likely to see many cost-saving opportunities over Wii's life because the tech is already established at low-cost production. Thus in the time Sony have saved 50% on their BOM, Nintendo may only save 20%. And when Nintendo have managed to save 50% on its original BOM, PS3 might be saving as much as 80% on theirs. I don't know how the figures will pan out, but it all depends on how prices drop as technology matures, and what the minimum expenses are. eg. eventually a BRD drive will be as a cheap as a CD drive, as netiher device can be made any cheaper. PS3's prices have much more room to drop and at a far higher rate.

Nintendo can't switch to 65nm and save significant cost that way either?

As for BluRay, the ramp up needs to be very significant in order to reach the scale required to see significant drops there. Given the lack of uptake by consumers of HD formats, particularly given the war between HDDVD and BluRay, I think it's optimistic to be talking about a $200 drop within a year.

I hope they are able to pull it off. But the things they need to happen can also happen for the other console makers. And unless BluRay drives start flying off the shelves within the next couple of years (which they aren't), economies of scale simply won't kick in.

 

[Corwin_B]

It's not about short-time price cuts. It's about future revisions, e.g. 45nm in 2009. If you look at the architectures, there's much more potential to cut costs in PS3 / Xbox 360 compared to Nintendo's Wii which is already a pretty much streamlined / simplified architecture. Moreover, while Wii will benefit mainly from die shrinks, the other consoles will benefit from architecture simplifications and the shrinks. Moreover those shrinks will be a much bigger cost reduction factor for them given the die sizes of the chips in PS3 and X360.
All that will lead to the cost and the price gap being reduced. ATM, the gap is 350 USD / 150 USD for Wii-PS3 (premium) and Wii-X360 (premium) respecitively. It won't stay that wide.

Right now, the "cost to cost" difference between the PS3 and the Wii is 350 + whatever Sony loses on each PS3 + whatever Nintendo gains on each Wii. We could very well be staring at over 500$ here.

While I agree with the premises of the article (that, given the large chips and complex nature of the PS3 and the 360, the cost reduction opportunities are more numerous for those than for the Wii), I don't think it will ultimately matter much for those reasons :
- existing price difference is very, very large and Nintendo will in all likelihood hit each major price point before MS and Sony
- this price difference is furthered by the subsidies for PS3/360 and by Nintendo making money at launch (at some point, MS and Sony will want to be profitable to fund their next gen machines, look at how the PS2 cash cow carried Sony in the troubled PS3 launch)
- while there are more cost opportunities for Sony/MS, there are other factors in play than die integration and die shrinks (near-fixed HDD cost for PS3 and 360 Premium, very complex PCBs, larger assembling/manufacturing costs)
- price cuts are more a result of marketing/accounting decisions than of technology advancements alone. Quick price drops on PS3, for example, could alienate early adopters, or force Sony to make some (costly) gesture toward them (like MS did when they dropped the XBox 1 in Europe very quickly after launch). Price drops also can be interpreted as admissions of failure, so there is a thin line to walk.

Now, price alone doesn't dictate victory in the console war, or Nintendo would already have won last gen. But it's certainly an important factor. If Wii manages to provide compelling software and ride the launch hype, that coupled with its price point could very well give it too much of an advance for MS and Sony to ever catch up.

Edit : one last reason is that once you drop to a certain level (say $99), further price drops don't attract that much more customers.

 

[Natoma]

It's not about short-time price cuts. It's about future revisions, e.g. 45nm in 2009. If you look at the architectures, there's much more potential to cut costs in PS3 / Xbox 360 compared to Nintendo's Wii which is already a pretty much streamlined / simplified architecture. Moreover, while Wii will benefit mainly from die shrinks, the other consoles will benefit from architecture simplifications and the shrinks. Moreover those shrinks will be a much bigger cost reduction factor for them given the die sizes of the chips in PS3 and X360.
All that will lead to the cost and the price gap being reduced. ATM, the gap is 350 USD / 150 USD for Wii-PS3 (premium) and Wii-X360 (premium) respecitively. It won't stay that wide.

Ok. I'll just have to believe that one to see it, and simply leave it at that. I'd be very shocked if the Xbox 360 Premium drops to $299 by Christmas, and that'd be its second year. I'd be very shocked if the PS3 dropped $100 in its second year, i.e. christmas 2008, as well.

Though I think the Xbox 360 has a higher opportunity since it can shrink its gpu and cpu, and doesn't have to worry about the DVD costs decreasing. The PS3 otoh has to shrink the gpu, cpu, and hope that the bluray drive costs reach economies of scale. I just don't see that happening very easily.

 

[Acert93]

Nintendo can't switch to 65nm and save significant cost that way either?

It won't be as significant.

If CELL costs $100 and RSX $100 (both probably high) and moving to 65nm has a 50% reduction in die space as well as better binning, fewer dies on the edge, and fewer overall defects Sony could see well over a 100% increase of usable dies per wafer. Consolidation and architectural changes in the future could bring even more wins.

Wii's CPU and GPU are already fairly small and so there are things to keep in mind (like pad and physical bus sizes that don't scale as well as transistors). But lets say they each cost $25 and see the same 100% increase per wafer.

CELL/RSX goes from $200 to $100 whereas Wii goes from $50 to $25.

With Sony's and Nintendo's respective pricing models that is a $100 vs. $25 cost reduction. Assuming they keep their current pricing models that would allow a $399 PS3 to go ahead with a $224 Wii.

One only need put the Xbox 360 in for the PS3 (they have similar die realestate) and see how a $100 drop on the Core could drop it to $199.

I think it is palpably obvious Nintendo is making a killing (and not a mere $10) on Wii hardware, so I expect them to be at $149 next year unless demand is so significant and pacing peak production that there is no need. So a lot of this is academic.

But from the perspective of MS's and Sony's ability to reduce costs, just looking at the PS2 where people were doubtful of its price dropping ability, yet it did so and Sony starting raking in the profits as well. Considering the PS3 was released at the tail end of 90nm and will see 65nm transitions within 6-9 months, cutting their die costs by more than half, I don't think it is unlikely to see huge drops in the costs to Sony as well to consumers.

 

[Shifty Geezer]

Nintendo can't switch to 65nm and save significant cost that way either?

The savings will be far lower. If Broadway costs $200 to make at 90nm, they'll save $100 on a process shrink. If it only costs $20 at 90nm, they save $10 on the shrink.

As for BluRay, the ramp up needs to be very significant in order to reach the scale required to see significant drops there.

The ramp-up only needs to be in manufacturing abilities, not toal blue-laser drive market. A larger market will drive cost savings faster, but aren't essential to improvements in technology shaving large sacks of dollars of the production costs when the inital costs are so high.

I think it's optimistic to be talking about a $200 drop within a year.

Me to. However, looking at PS3 there's something like $400 tied up in Cell+RSX+BRD. A couple of major efficiencies is all that's needed to drop $200 off the BOM. I wouldn't be too surprised if $150 was saved within 12 months. IT's more a side-effect of going with very costly tech, rather than any clever future optimizations!

 

[Natoma]

I hope you guys are right. The only two things keeping me from getting a 360 is price of the premium and not owning a HDTV (rectified later this year probably). Same for PS3, though price is magnified even moreso, as is the lack of games for it at this moment in time.

 

[Acert93]

Ok. I'll just have to believe that one to see it, and simply leave it at that. I'd be very shocked if the Xbox 360 Premium drops to $299 by Christmas, and that'd be its second year. I'd be very shocked if the PS3 dropped $100 in its second year, i.e. christmas 2008, as well.

Lets just look at the Core for simplicity. A core currently retails for $299; MS costs are unknown.

What are the major costs?

512MB GDDR3
Xenon CPU
Xenos GPU
eDRAM
Ana scaler
I/O chip
Motherboard
Cooling, Case, Ports, Cables, Controller

Considering MS losses are unknown, all we can do is look at proportions in regards to retail costs (although there are some nice charts showing the typical cost for chip production per die area). I think it is safe to say that the CPU, GPU, eDRAM and system memory are the major components of the systems cost. Would it be unfair to say those parts are 2/3rds the systems actual cost to make?

I don't think so, so lets assume that of the $299 for a Core, $200 are for the GPU, CPU, eDRAM, and System Memory. So what is going to happen in 2007?

GPU => 90nm to 65nm => 50% or more cost reduction
CPU => 90nm to 65nm => 50% or more cost reduction
eDRAM => 90nm to 55nm => 60% or more cost reduction
GDDR3 => Same process, mature process, economy of scale (used in GPUs, the 360, PS3, and Wii) => Conservative 20% cost reduction

Using the low end of the numbers for cost reduction (which they will be higher), and assuming each of the 4 components are equal in contributing cost to the final build (they are not), that means on these "$200" of relevative cost in the final system MS can cut 45% in 2007 due to process changes. That means MS may be paying $110, relatively, for those formerly $200 in parts.

Assuming the same pricing model they currently are using it is easy to see how a $299 SKU could become a $199 SKU. And if history is a lesson, the PS2 did it so why no the Xbox 360? And this isn't factoring in that they are seeing mature processes, economy of scale, and the process changes will bring larger reductions than the ones pointed out above. And things like launching costs and getting assembly plants up to speed, staffed, etc advertising for the launch, etc are all in the rear view mirror.

The one reason I DON'T think MS will drop to $199 is because they have Halo 3 & GTAIV and a boat load of other titles coming out this year (especially due to delays). They will be the only system to get Halo and the cheapest system to get GTAIV. That alone will drive massive demand and MS being able to pocket, lets say $30 more (e.g. $229) may mean more to them than actual marketshare. It works for Nintendo

Anyhow, the PS2 waited nearly 18 months to drop price. And when they did they defied logic when they went from $299 to $199 and really cranked things up. I see MS and Sony doing the same thing.

And in Sony's case I see even great potential for cost reduction. BDR alone will ramp down quickly. It may still be VERY expensive, but it won't have the production problems of 2006 in 2007, which hit Sony pretty hard. The fact there will be over 10M diodes made by fall 2007 will in itself be a motivator for cost reductions in producing the diodes.

 

[Acert93]

I hope you guys are right. The only two things keeping me from getting a 360 is price of the premium and not owning a HDTV (rectified later this year probably). Same for PS3, though price is magnified even moreso, as is the lack of games for it at this moment in time.

Price is preventing my entry to the market as well. Until they hit $199 I just cannot see jumping in. Especially when you want things like FF Wheels and HD displays