NVIDIA says PlayStation 4 not worth the 'opportunity cost'

An NVIDIA executive has said that he believes his company passed on making chips for Sony's PlayStation 4 console because the opportunity cost was too high.

Instead of using an NVIDIA graphics card, Sony's PlayStation 4 console will use both a graphics card and processor from rival AMD. According to Tony Tamasi, senior vice president of content and technology at NVIDIA, however, the company didn't think it was the right business move to be involved in the PS4's development. Tamasi told GameSpot:

I'm sure there was a negotiation that went on and we came to the conclusion that we didn't want to do the business at the price those guys were willing to pay. Having been through the original Xbox and PS3, we understand the economics of the development and the trade-offs.

Instead, Sony's PlayStation 4, which was announced last month, runs on AMD's 8-core 64-bit x86 "Jaguar" CPU and a Radeon GPU capable of churning out 1.84 TFLOPS to process graphics and others tasks.

AMD is also rumoured to be behind the hardware of Microsoft's next Xbox, although NVIDIA doesn't seem phased by Redmond's choice. Tamasi said NVIDIA is "building a bunch of stuff" and that the console business as a whole isn't worth the opportunity cost:

If we say, did a console, what other piece of our business would we put on hold to chase after that? In the end, you only have so many engineers and so much capability, and if you're going to go off and do chips for Sony or Microsoft, then that's probably a chip that you're not doing for some other portion of your business.

AMD will likely be hoping that its place in the next generation of consoles will help get them back on track. In January, it was announced that their losses widened to $473 million in the fourth quarter, with quarterly sales falling by 32 percent to $1.16 billion.

Source: Gamespot | Image via Sony

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33 Comments

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Sounds like a poor excuse for losing BOTH of the next gen consoles to AMD. "Nah, we didn't lose, we're just so cool we decided we didn't need millions upon millions of people buying hardware with our chips in it."

Master of Earth said,
most game doesn't fully take advantage of 1080p. which is kinda crap.

Most user places doesn't take full advantage of 1080p. that's kinda crappy.

I can tell easily from far away on my 55, I could also do it on my old 40.

if you're talking about 32inch, then sure, you sort of got a point, except more 32 users sit a lot closer to the tv.

i've never been a fan of AMD chips. while i see that their chips are overclocked, they also tend to generate alot more heat. i feel like the PS4 is going to have some major overheating issues at launch time.

Nvidia is so full of s***. They basically signed away the ownership of their company to Microsoft for the first xbox console. There is a contract that specifically states if Nvidia ever decided to sell the company that any shareholder that held more than 40%? of the company that Microsoft had the FINAL decision if that purchase could be made. Microsoft made this contract specifically so they had hardware available for the xbox in case a competitor tried to buy NVidia out and choke off supply of the gpu to the xbox console. Nvidia at that time was so desperate for cash they took the deal.

What has really changed since then? They got out of the motherboard market as Intel pretty much cut them out of that market. Their tegra line of products are not as powerful as they wanted the media to believe so they arent' really being used in vast quantities - only a few devices use them - surface rt and a few other tablets but the majority of tablets are using QUALCOMM based chips. The only sector Nvidia is doing well in is the desktop GPU sector, which they could easily convert to run on any of these x86 based consoles (ps4/xbox 3), so them claiming it wasn't worth the opportunity cost sounds more like sour grapes because a rival got the deal.

I think there are a couple big differences here.. 1) AMD has closer ties with Global Foundries than Nvidia has with TSMC and 2) Nvidia needs to invest a lot into the rapidly changing ecosystem of android devices, whereas AMD can completely ignore it.

Maybe. I think AMD has a better product with integrated graphics right now and they are also likely to make a slimmer deal for themselves just to get the contract...i think it's good for everyone all around.

Enron said,
I like the GTX Titan. I hope they put one in the new Xbox.

It's ok but they mainly call it that because you have to tighten your wallet to afford one.

Hm... It might be me, but it doesn't sound like he was involved or really has an inside knowledge of the events... Just theorizing...?

M_Lyons10 said,
Hm... It might be me, but it doesn't sound like he was involved or really has an inside knowledge of the events... Just theorizing...?

Or maybe, PC hardware sells much better then console hardware for them. I know we keep getting told PC gaming is dead and it's console all the way from the likes of EA and other big publishers, but NVidia's stance on the matter might be proving otherwise.. at least for hardware developments.

In an uncertain market that we're in at the moment, it'd be sensible to deliver a solid profit to keep the company developing and heading into new technology rather then being held back with a console that may, or may not be successful.
In a way, AMD's use in the PS4 (and even the next xbox) could be more of a marketing brand awareness then actual profiting exercise based on the "willing to pay" comment he made.

Hahaiah said,
Thought the same thing. "I'm sure" which means I don't know ****.

I agree entirely.

It seems like he is "profit margin" focused when volume can easily make up for lower margins... It's a very odd statement, and worded as if he's doing nothing more than drawing conclusions and trying to make them sound like informed accounts...

Hahaiah said,
Thought the same thing. "I'm sure" which means I don't know ****.

It could, but in this case and considering the person and the company, it most likely means "I can't officially comment, but here's what theoretically could have happened and in reality is what happened, but I can't say that".

sagum said,

Or maybe, PC hardware sells much better then console hardware for them. I know we keep getting told PC gaming is dead and it's console all the way from the likes of EA and other big publishers, but NVidia's stance on the matter might be proving otherwise.. at least for hardware developments.

In an uncertain market that we're in at the moment, it'd be sensible to deliver a solid profit to keep the company developing and heading into new technology rather then being held back with a console that may, or may not be successful.
In a way, AMD's use in the PS4 (and even the next xbox) could be more of a marketing brand awareness then actual profiting exercise based on the "willing to pay" comment he made.


Based on previous sale results from the Playstations.
They would miss out at 70-120million sales of GFX cards.
Even if you'd price it at 30bucks, these sales would rival their yearly revenue. And that would be just 1 project.

Sounds like someone is butthurt. (not you, the NVidia guy)

BTW, the PS3 ran ATI and so did the 360 for their GFX cards, so I don't see how this became 'marketing awareness'. There must be a reason they both used an ATI and now come back for an AMD.

I guess all those enhancements and knowledge transfer from MS for the AMD GPU will trickle down into the pc consumer line at some point. Nvidia is going to lose out in the next generation of hardware.

FunkyMike said,
I guess all those enhancements and knowledge transfer from MS for the AMD GPU will trickle down into the pc consumer line at some point. Nvidia is going to lose out in the next generation of hardware.

It did with the amd gpu in the Xbox 360 and the whole unified shader model iirc.

AmazingRando said,
I agree, but I think NVIDIA's long term focus is shoring up the mobile gaming market segment.

They still haven't really hit it off with the Tegra platform. Always being behind the curve when releasing. They just switched to 28nm with the Tegra 4. If the chip gets any traction in the market place they might have a shot.

I don't see the opportunity cost involved when it's not like they're giving up something else to focus on gaming consoles.

Davo said,
I don't see the opportunity cost involved when it's not like they're giving up something else to focus on gaming consoles.

You obviously don't know what opportunity cost means. Everything has an opportunity cost.

As he said, you only have so many people. So it would slow their mobile/pc lines which are far more important to them. AMD has it easier as they don't have anywhere near the market share Nvidia does. So these contracts are a better lifeline for them.

Why would they want to make a million cards for Sony when they only make $1 on each card, when instead they can make 100million for PCs and make $100 per card.

Simple economics.

The way Sony is going they might not even be around to make 5000 PS4's, then Nvidia would have LOST a bucket load of money developing something that they can't get a return on.

LogicalApex said,
As he said, you only have so many people. So it would slow their mobile/pc lines which are far more important to them. AMD has it easier as they don't have anywhere near the market share Nvidia does. So these contracts are a better lifeline for them.

Uhm so producing 1 more GFX card is undoable for the massive Nvidia? What nonsense is that. Its a modified normal GFX card they would already produce, small change there. Most likely is able to use the exact same assembly line as the card it would be based on.
Just sounds like an excuse because again they've been the underdog for the PS GFX cards.

Its not like there's a completely unique GFX card in the PS4.