Nvidia said fuck you PS4

Consoles have historically been seen as banner products for the companies that design and manufacture their hardware. According to Nvidia site the Nvidia has refused to design  GPU for the next PlayStation. In 2002/2003 had privilege to design GPU for Xbox and later on for Xbox 360 but the problem was that this project for Nvidia was financial failure. Given these updates, it seem odd that Nvidia apparently walked away from negotiation table with Sony on upcoming PS4. While there’s some marketing upside from game enthusiasts, GPU manufacturers don’t get top billing (or typically, any billing whatsoever) on console titles. There’s no lengthy logo crawl or joint marketing. Sony isn’t selling the “Sovidia PS4″, it’s the Sony PS4, period.

Then there’s the margin question. Nvidia’s 10-K filing for fiscal year 2003 (that’s calendar year 2002) states that the company made 23% of its total $1.9B revenue, or roughly $400M, on Xbox sales. That’s profits for one year — the original Xbox went on to sell some 24 million consoles worldwide. Nvidia and MS eventually signed an agreement that reduced the cost Microsoft paid for Xbox hardware, but this figure gives us a starting point to work with.Fast forward to the PS3 and its RSX graphics. Two years ago, in January 2011, Nvidia CEO Jen-Hsun Huang told reporters that the Sony-Nvidia deal had earned Nvidia $500M in royalties since 2004. The total number of shipped PS3 consoles by March, 2011 stood at 50 million according to data from the NPD group. Half a billion is nothing to sneeze at, but the numbers imply that NV agreed to much smaller margins on the PS3 than it managed to lock in on the Xbox.

One of the most persistent rumors about next-generation consoles like the PS4 is that both Sony and Microsoft wanted to avoid the bloodbath that occurred in 2005-2006. Both companies took three-digit losses on a per-unit basis. Sony’s losses were worse than Microsoft’s, despite the PS3′s higher price tag ($499 and $599 as compared to the Xbox 360′s $299 and $399). Going in to the PS3 launch, Sony executives were hilariously arrogant, with print-ready quotes like “The next generation doesn’t start until we say it does.” When asked about the price, then-CEO Ken Kutaragi memorably declared that the company wanted consumers to think to themselves “I will work more hours to buy one. We want people to feel they want it, irrespective of anything else.”

We don’t know when Sony and Nvidia sat down to talk about the PS4, but the Sony’s market position had changed drastically by 2010-2011. The PSP Go was moribund, smartphone sales were rising, and the PlayStation 3 — despite costing far more than Microsoft’s Xbox 360 — had only recently begun to make a profit. Total development and marketing costs on the PS3 from the 2004 Nvidia deal to that time were still deeply in the red.From Sony’s perspective, a number of the gambles it took on Cell, Blu-ray, and on high-margin Nvidia hardware, simply hadn’t paid off. Yes, the system was selling well, and yes, it had boosted the adoption of Blu-ray, but the advent of streaming video and the initial war between Blu-ray and HD-DVD had slowed the new standard’s adoption rate.

The PS3 was a massive gamble. It combined multiple cutting-edge technologies, a specialized processor core, an entire PS2 (for hardware-provided backward compatibility), and an integrated wireless solution at the high end. In the long run, that gamble didn’t work. An analysis by Ben Cousins, a 13-year game-industry veteran, writing for Kotaku, shows the profits and losses for Sony’s gaming division from 2004 through the end of 2011. His figures and graphs are available for perusal.