Nvidia Passed Up On The PS4 Because It Wasn’t Worth It
When it comes to choosing the GPU for your new PC, there are two brands to choose from; Nvidia and AMD. Personally, I’ve loved all the Nvidia cards I’ve ever owned and will probably stick with them for the foreseeable future, but that’s not to say AMD is much worse. In fact, AMD has secured deals with Microsoft and Sony to produce the chips in their new consoles. So, why wasn’t Nvidia considered?
Apparently, they were, by Sony in fact. Sony approached the hardware giants to produce the chips for the PS4, but Nvidia ultimately turned down the opportunity because of the impact it would have on other aspects of their business. Tony Tamasi, Senior VP of content and technology at Nvidia explains.
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“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 [console development] and the tradeoffs.”
Seems like an educated decision on their part if you ask me. Producing a massive order like this is bound to take a hit on other manufacturing processes, and as Tony continues to explain, Nvidia just doesn’t have enough staff to ensure that all their commitments can stay on track, had they taken the deal from Sony.
“We’re building a whole bunch of stuff and we had to look at console business as an 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. And at least in the case of Sony and Nvidia, in terms of PS4, AMD has the business and Nvidia doesn’t. We’ll see how that plays out from a business perspective I guess. It’s clearly not a technology thing.”
When AMD acquired the rights to produce the chips for both the next Xbox and the PS4, it must have been a breath of fresh air for the company. AMD has been struggling to compete with Nvidia for a while now and an operating loss of $131 million in its quarterly earnings report did little to instil a new sense of trust in investors.
Clearly, Nvidia is in a completely different situation The company posted a profit of $174 million in it’s latest earnings call, showing everyone that they really can make sacrifices like this and still stay competitive. Obviously, these are still early days, and the consequences of this decision to pass up a deal with Sony could still have an impact in the future.