[Beowulf] Microsofts trick - was AMD reveals potent parallel processing breakthrough

Vincent Diepeveen diep at xs4all.nl
Wed May 8 08:43:23 PDT 2013

On May 8, 2013, at 2:55 PM, atchley tds.net wrote:

> On Wed, May 8, 2013 at 5:38 AM, Vincent Diepeveen <diep at xs4all.nl>  
> wrote:
> On May 6, 2013, at 3:17 AM, Christopher Samuel wrote:
> > Hash: SHA1
> >
> > On 04/05/13 16:32, Eugen Leitl wrote:
> >
> >> Purportedly, there will be something resembling the PS4  
> architecture
> >> for the PC market. That would be an APU with 8 cores and stacked
> >> memory.
> >
> > Also interesting that Microsofts next XBox (720) will also be AMD,
> > with similar specs to the PS4.
> >
> I don't even need to read the article to know what's gonna happen.
> It seems Microsofts Xbox trick is to simply sit and wait for what
> Sony is doing, then take a similar chip,
> yet slightly less powerful and slightly cheaper and then sell the
> next Xbox cheaper than Sony's playstation.
> It's a strategy that works. Fact that they sold similar amounts of
> Xboxes like PS3 basically proves my opinion that Sony failed
> with ps3. The reasons why ps3 failed to outsell previous playstations
> would be very interesting to study as in itself market with
> potential customers is 4 times larger now or so. The factor 4 is a
> GUESS - it'll be way larger than that now that Asia opens up
> and we have a nouvelle rich in Africa with Africa moving quickly.
> I thought MS' strategy all along was to sell the hardware below  
> cost and to make it up on licensing revenue, which has been the  
> strategy for all console makers, has it not? Given that and MS'  
> large cash holdings, I do not take it as a given that they will  
> choose a cheaper version than Sony to try to save on hardware costs.

Not a single company sells such consoles below the constant  
production price.

Sure they need to sell millions to get back R&D and especially their  
support helpdesks for the product... ...yet they will sell millions  
of consoles...

If you shop for a product where you know for sure you're gonna  
produce 10+ million from possibly 100+ million,
then all doors open and prices you get on anything, especially  
licensing, that drops to not much above production cost of the  
manufacturers in question as they have to compete...

Just calculate yourself what cost is of producing such product.  
Basically, CPU/RAM/storage not counted, product production cost is  
somewhere around $10. Shipping the product
is really noticeable.

So price they buy that chip for determines price completely.

> Also, sales of all consoles are down. The new Wii has hardly made a  
> blip in the market. Some speculate that the era of consoles is past  
> given how many people game on their phones and tablets.

I would say an Ipad and Iphone and other stuff is a great console  
already. In fact it has far more expensive items on it than a 100%  
game console. Phones have GPS nowadays,
GPRS, and GSM/UMTS that's adding cost to the product. So a console  
definitely is cheaper to produce, if we forget about the more  
expensive APU that's inside.

Yet it's about the economic price of that APU. When you order 10+  
million of them at AMD, AMD is going to deliver it for a price you  
probably wouldn't believe probably.
And they better, otherwise the order goes to a different company....

That's how production price gets that low.

Any website articles also on PS3 having had a production price  
initially of $800 a piece, that's a nonsense marketing statement of  
That's not how it works in the game industry...  ..that's only  
showing how marketing works :)

For a few years now already CPU manufacturers most important  
optimization is just for gamers and no one else: both intel as well  
as AMD are doing that.
So if you manage to launch a product with a great cpu and gpu that  
really performs better than what they can get for double that in the  
they'll sell a lot.

A dedicated console always is more attractive than doing it from a  
computer, provided you have the same or BETTER performance at a lower  

In computerchess this was even more the case - performance really  
mattered. So the dedicated chesscomputers which got exported to 105  
countries and each version of each
machine sometimes sold easily 100k or more machines, it all was  
suddenly over when the PC was there with a total superior processor -  
totally killing the h8 single chips.

The $1000 dedicated machines also soon lost the battles. It had  
sometimes 68040 cpu's in fact - yet those they sold for $1k to $2k a  
piece those dedicated chess computers
and  tournament versions for $10k (that 68040).

Logically the PC which totally won from that, had a much nicer  
interface, it won the battle.

That's the big difference with those consoles. They produce that much  
from them, that the price they can produce them for, and the hardware  
they can put inside,
is something no one should be able to compete with. Now the big  
question is always: how much of their profit do they want to get rid  
of when selling a new console?

Sony *knows* their thing is going to be better than the Microsoft  
box. Same chip - just better. So the pricing of it is always an  
economic price, not a price at which they would make
a loss of any kind.

Realistically i guess they earn less on it than historically was  
earned on those dedicated chess computers. Those went 4 times. So  
production price times 4 usually was customer
price. I'd guess in this case Sony is happy to just take a 100%  
margin (that's not profit - that's a margin) on it. So production  
price times 2 is minimum price.

Any pricing above that, which so far they did do, for sure is there  
because of economics.

I feel the price

If we look at it, CELL has been a disaster for Sony there. Being the  
only one with a top console - they still managed to sell 76 million  
consoles - that should tell you *something*
about how many you can sell if you have a killerconsole.

p.s. in music industry the same price drop is there if you negotiate  
about million+ volumes. You pay factor 12+ less royalties then each  
copy of your product sold.
        Simply as they have to compete then suddenly with artists you  
can sign up which they do not have under contract....

> Scott

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