What we know about the next PlayStation and Xbox

The next PlayStation and Xbox are rearing their heads. But they will not launch until late 2014 and will not be the graphical beasts some expect them to be, I am sure. Firstly, let us consider all the various news and rumours surrounding those consoles. And let me start this article with what I know about the next Xbox.

Development kits for the next Xbox have been in the hands of at least one European developer for at least six months, I can exclusively reveal. The source is an employee within the studio and he states that the console's architecture will closely resemble that of a PC. This is not shocking news. We heard rumours about development kits for the new Xbox being in the hands of at least one studio back in May 2011. But it is interesting to hear that the console will likely be modelled around PC architecture.

Meanwhile, VG Leaks has published tech specs, which appear to corroborate my story. Digital Foundry offers more interpretation of this data (thanks to Joystiq). The commentators on all articles seem to agree that these specs are on the humble side, probably because Microsoft is looking to bundle some kind of Kinect hardware or a tablet controller, like Nintendo, and need to offset the additional costs for such peripherals. The specs list a Natural User Interface or NUI, which might be just that.

The PlayStation4 is rumoured to feature similar architecure. According to Eurogamer, Sony's new console will also feature an AMD CPU with eight cores. The article sums up the expected specs of both the new Xbox (Codename Durango) and PlayStation (Codename Orbis) by noting:

The AMD connection that defines both Durango and Orbis confirms that both consoles are much closer in design to gaming PCs than their predecessors, which may result in stronger ports to the computer format.

And Sony seems to want to do away with traditional controllers, as well. CVG reports that various sources have told them Sony is considering "biometric sensors on the grips and an LCD touch screen" for the new controller. All this comes at a hefty cost, of course.

Other rumours regarding the new Xbox and PlayStation concern possible launch dates and price tags. The consoles will launch in October and November 2013, respectively, and retail for between $350 and $400 in the US, Colin Sebastian believes. Sebastian is a market analyst with Baird Equity Research and has been covering the industry for many years.

I strongly disagree on the proposed launch dates. To my knowledge, no console has ever been revealed at an E3 and launched the same year. Microsoft and Sony also have a vested interest in dragging this generation out for as long as possible, because they are only just starting to earn some money with the 360 and PS3, respectively.

Also, Sony boss Kaz Hirai has been hinting at the fact that they want to be last this generation. I am convinced that you will not see either successor on store shelves until late 2014, at the earliest, in any territory.

Sebastian further expects both consoles to comprise off-the-shelf components rather than custom-made ones, which will allow retail prices to be lower than expected and learning curves for developers to be flatter. Here, I absolutely agree. With the PlayStation Vita, Sony already went down that road.

The downside will be a lack in graphics power, I believe. Games may look better at the beginning of the launch cycle, because developers will already be familiar with the hardware. But this also means that games will not look significantly better when the console is nearing the end of its life cycle.

In fact, do not expect the new PlayStation and Xbox hardware to be a huge step up from the Wii U, at all. Since both Sony and Microsoft are clearly intending to bring cosoles with more complex controllers to market, they will have to make compromises when it comes to the raw hardware power of the machine itself. A biometric controller and a next generation version of Kinect cost a lot of money and neither company wants to price themselves out of the market again with a $600 console. A target price of no more than $400 seems realistic to me.

Bear in mind that both Sony and Microsoft are not doing too well financially. Sony has just agreed to sell their US headquarters a few months after having their credit rating slashed to junk status by rating agency Fitch.

Microsoft is doing a little better but has just posted that quarterly earnings for the Xbox division were down eleven percent from the same quarter last year. Operating income from this division is actually up a little from last year, but it is clear that the Xbox division is not significantly contributing to Microsoft profits in any meaningful way. Remember that I had a close look at the Xbox division's profitability in mid-2007 and from 2002 up until then, the division had generated total losses of around six billion Dollar.

One analyst even predicted that Microsoft might sell off its Entertainment and Devices division, which includes the Xbox branch, to corporations like Sony or Barnes & Noble. Microsoft's priority, the analyst noted, was to save the Windows operating system and they would be prepared to sacrifice any other enterprise necessary.

Yet few people seem to understand what the combination of the two manufacturer's cost-consciousness, costly controller designs and a desired low price tag mean for hardware power. Some developers have started producing games that run in the new resolution 4K (approximately four times bigger than 1080), expecting that those consoles will be able to deliver that at a decent framerate. In my mind, it is almost impossible that we will see such a leap in visual fidelity in this generation.

As far as costs are concerned, bear in mind that the Wii U hardware is only an incremental step up from 360 and PS3 because the tablet controller does not come cheap. Yet Nintendo still needed to sell the Wii U at a loss, a risky strategy Nintendo has avoided for the past generations. Sony and Microsoft face the same problems and then some, as noted above. And they have less financial muscle than Nintendo at this time. I guess we will all have to accept that the Wii U is a next-gen console, after all.

EDIT Sony has invited industry professionals to an event on February 20th at 6pm EST. Sony Computer Entertainment America teases the "meeting" with the tagline "see the future" both via its blog and its Twitter account. The main event page features an email registration form and a cool teaser video ending in the infamous ´triangle circle cross square´ button logos.

Sony Computer Entertainment Europe features the same teaser website in each respective language. Surprisingly, however, SCEI's Japanese website features no teaser. You would expect them to be the first. It is a given, though, that Sony wants to tease the PlayStation4 at the event. At any rate, I will stick by my prediction that Sony's new home console will not launch before late 2014.