Why does Sony spend so much on its own chip designs?

S

snapty00

Banned
I'm likely misinformed, but why do they do this? Why don't they just customize processors that are already made by other companies?

I mean, for all I know, maybe Sony and its partners have created the best chips known to man relative to the time period, but it seems like other companies catch up so quickly, anyway, that it doesn't really matter.

I mean, a company like Nintendo can make a totally ass product like GameCube with largely off-the-shelf parts, have it bomb like crazy, and yet still make a tiny profit from it. Internally and financially, that seemed like the smart thing to do.

So, I just don't get it. What has convinced Sony that making its own chips (with partners, of course) is the best course of action? Why do Nintendo and Microsoft disagree?
 
I mean, a company like Nintendo can make a totally ass product like GameCube with largely off-the-shelf parts, have it bomb like crazy, and yet still make a tiny profit from it. Internally and financially, that seemed like the smart thing to do.
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I'm gonna have to take issue with that. Flipper was designed from the ground up by ArtX. Gecko is highly refined and based off a customized PowerPC core. Hardly 'off-the-shelf parts'.
 
Well if the GC has off the shelf parts, what does the Xbox have?

Off the shelf to me would indicate you could walk into a BestBuy and pick up an ArtX videocard.
 
snapty00 said:
I'm likely misinformed, but why do they do this? Why don't they just customize processors that are already made by other companies?

I mean, for all I know, maybe Sony and its partners have created the best chips known to man relative to the time period, but it seems like other companies catch up so quickly, anyway, that it doesn't really matter.

I mean, a company like Nintendo can make a totally ass product like GameCube with largely off-the-shelf parts, have it bomb like crazy, and yet still make a tiny profit from it. Internally and financially, that seemed like the smart thing to do.

So, I just don't get it. What has convinced Sony that making its own chips (with partners, of course) is the best course of action? Why do Nintendo and Microsoft disagree?
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It's actually cheaper to manufactuer your own parts. Especially if you can use those parts in other electronics. The problem with Sony is they go for unconventional hardware designs which inflates the costs. Microsofts way was just stupid and they have lost a lot of money for their business model with Nvidia. I think Nintendo's way was the smartest way. We'll see how things go down next gen though.
 
because they are a consumer electronics company foremost. thats their bread and butter! they started by designing and producing massive quantities of consumer electronics such as TV's, stereos, home theater systems, etc.
for instance, samsung deisgns their own cellphones, and so does nokia. do you get the analogy? if one of the companies stopped research and development, they'd fall behind the other.
 
lockii said:
Well if the GC has off the shelf parts, what does the Xbox have?

Off the shelf to me would indicate you could walk into a BestBuy and pick up an ArtX videocard.
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xbox was definitely designed from off the shelf parts.
 
Even if it's cheaper long-term to develop their own parts, since the machines seem to be replaced every 4 or 5 years anyway, it doesn't look like the investment really pays off much or at all. I mean, on year 6 or 7 of the machine, I guess Sony might theoretically make more per machine, but they had to spend billions in R&D to make the design from the start.
 
I have no clue as to why, but they probably have this belief that their tech could be used elsewhere.

Take this television for example, it has the ps2's emotion engine inside.

005al.jpg
 
the basic difference between sony as opposed to ms and nintendo is very simple. sony is a hardware company, whereas ms and nintendo are primarily software companies.
sony deisgns their own hardware because...that's what it does!.
 
snapty00 said:
Even if it's cheaper long-term to develop their own parts, since the machines seem to be replaced every 4 or 5 years anyway, it doesn't look like the investment really pays off much or at all. I mean, on year 6 or 7 of the machine, I guess Sony might theoretically make more per machine, but they had to spend billions in R&D to make the design from the start.
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They may launch a new machine after 4 or 5 years, but they continue producing the old ones for years. They've sold close to 30 million PS1 systems since the PS2 first launched. Considering the PS2 has sold at a higher rate than the PS1, they're likely expecting a heavier back cycle going forward than you are.
 
not to mention that, this time, the cell is a joint venture between sony, toshiba, and IBM, and both sony and IBM will be using it in other products (i dunno what toshiba plans to do with it.)
 
Ghost of Bill Gates said:
Lets be fair here.. you will not be able to buy xbox geforce 3 hybrid off a store shelf. neither the Pentium 3 chip that uses a extra... something, forget.
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well they didnt just slap together consumer products together, they modified it and integrated of course. but to a far lesser extent than the ps2.
 
from what i've read CELL is totally scalable.

So small Cell chips in mobile phones, PDAs, etc etc,

More powerful beasties as u go up the food chain. PS3 etc up to Beasts in supercomputers.


So inside digital TVs for both toshiba and Sony, decoding DVD, Blu-ray, running AV amps, microwaves, blah blah
 
A lot of these folks won't admit this but Sony is probably in the red with the PS3 next gen for a longer time than they ever were with the PS2. I'm sure they'll make their money back, but it's going to be a long road ahead. They obviously wanted to try to knock their competetors out of the arena with the PS3. It's going to be the most powerful console now with nVidia. But at what cost? I'd wager they've spent 2 to 3 times what Microsoft has for next gen on hardware alone. And Sony is anything but a cash rich company. Should the Cell find limited success with only the PlayStation and some of Sony's electronics then they made a bad decision. I fail to see a scenario where the Cell becomes the defacto standard CPU for folks as x486 design has weathered through it all. But you never know. Should Cell actually make huge strides into more products and personal computers then they may hit a goldmine. And nVidia might be pratically giving away their technology to Sony to get on board with them. So there's a lot of deals under the table which we aren't aware of. From the surface though it looks like there's a lot of $$$ on the table from Sony. Can the recoup it? That remains to be seen. As a gamer I could give a damn.

Look at what this system will probably have in it: a next gen nVidia GPU, the Cell CPU (several from what I understand), HDD, and 256 Megs of RDRam's latest. That's not cheap.
 
I was laughing when people said PSP will cost less than 249$! You have to know those people over at SONY are crazy.
 
snapty00 said:
I'm likely misinformed, but why do they do this? Why don't they just customize processors that are already made by other companies?
Click to expand...
Er, what do you think the MIPS chips in PS2 and PSP are? Why is nVidia making the PS3 GPU?


snapty00 said:
I mean, a company like Nintendo can make a totally ass product like GameCube with largely off-the-shelf parts, have it bomb like crazy, and yet still make a tiny profit from it. Internally and financially, that seemed like the smart thing to do.
Click to expand...
GC isn't any more "off the shelf" than PS2 or PSP. Or N64/PS1 for that matter.


Basically, Sony likes doing it's solutions internally since they also have the manufacturing to support more dramatic economies of scale. It's a risky business though, as Sony's high end designs almost require gigantic sales to make a return on that huge upfront investment.... if PS2 sold only as well as GC or Xbox, it could've sunk SCEI (and possibly Sony Corp entirely). Nintendo's (and now Microsoft's) plan to contract custom components and outsource manufacturing means slower manufacturing reductions but far less risk too.
 
seanoff said:
from what i've read CELL is totally scalable.

So small Cell chips in mobile phones, PDAs, etc etc,

More powerful beasties as u go up the food chain. PS3 etc up to Beasts in supercomputers.


So inside digital TVs for both toshiba and Sony, decoding DVD, Blu-ray, running AV amps, microwaves, blah blah
Click to expand...
Well, put me down as a skeptic, because I really doubt it ever gets into products much outside what Sony forces it to be in. If you need a processor with low power consumption, a shitload of companies already have that covered, such as ARM and even Intel to a lesser extent. And if you need just a powerful processor, well...take your pick.

I just don't see what's so unique about CELL that people are going to jump on board with it, outside -- of course -- Sony and possibly IBM and Toshiba.
 
snapty00 said:
Well, put me down as a skeptic, because I really doubt it ever gets into products much outside what Sony forces it to be in. If you need a processor with low power consumption, a shitload of companies already have that covered, such as ARM and even Intel to a lesser extent. And if you need just a powerful processor, well...take your pick.

I just don't see what's so unique about CELL that people are going to jump on board with it, outside -- of course -- Sony and possibly IBM and Toshiba.
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You've just answered your own question.

Sony don't necessarily plan to license this out to other companies outside of the existing partnerships, but likewise this allows them to avoid the likes of ARM etc, and have a ready supply of chips for their upcoming TVs, HDD recorders etc.

I'd imagine CELL would be good enough in one form to record HD onto bluray for example, bypassing expensive realtime MPEG2 or 4 encoders.
 
snapty00 said:
I mean, a company like Nintendo can make a totally ass product like GameCube with largely off-the-shelf parts, have it bomb like crazy, and yet still make a tiny profit from it. Internally and financially, that seemed like the smart thing to do.
Click to expand...

as its been said its more profitable for Sony in the long run, when PS2 & PSP component costs go down Sony sees the benefits immediately, those cost reductions however usually don't get passed down if you're using off the shelf parts, that's why Nintendo's losing money on the GameCube now, they just can't match the rate at which the component costs of the PS2 goes down without sacrificing their own margins
 
mrklaw said:
Sony don't necessarily plan to license this out to other companies outside of the existing partnerships, but likewise this allows them to avoid the likes of ARM etc, and have a ready supply of chips for their upcoming TVs, HDD recorders etc.
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When it's all said and done, though, Sony ITSELF will probably be back to chips from other companies. After all, why doesn't the VAIO use Sony's chips? Or its PDAs?
 
snapty00 said:
When it's all said and done, though, Sony ITSELF will probably be back to chips from other companies. After all, why doesn't the VAIO use Sony's chips? Or its PDAs?
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VAIO is an Intel x86 PC/notebook with standard parts and OS (Windows/Linux/AMD/Intel/...), nothing propriety like the consoles. PDAs are the same (Palm OS/StrongARM/Motorola).
 
If Sony's made a killing off their chip research from five years ago, I don't see it. I highly doubt most consumers care about what the PS2's made out of, so long as it has the games people know and love. At the same time, the drop in component costs seems to help out Sony moreso than MS and Nintendo, but this hardly affects Nintendo in the end.
 
You spend money to make money. Sony's strategy is probably the smartest when you look at it. Semiconductors are the heart and soul of the gaming industry. Without the faster chips, the industry doesn't move forward. So they've made that their main focus. By making chips themselves, all they really have to do is swallow infrastructure costs. Put up big money for R&D and facilities, and then hope the economies of scale turn the loss into a profit early, then it's all about earning after that. How much you earn will be determined by what your price is.

Sony spend a lot in preparation for the PS2, but they've also made a lot of money off it now as well. And they've kept a consistently higher pricepoint relative to the competition meaning they've been able to make a lot of money this gen. Why is it better though? Because Sony can always compete on a hardware level now. They can always bank on enjoying better profit margins than the competition in a matter of 2 years tops (assuming they keep competitive in sales). So they can take a stiff hit early on and still hope to make money in the long run. Unlike Nintendo which had to compromise on the performance of their machine to keep the costs low (could have tried for an Xbox killer, but instead made a tweener). And MS went the opposite direction, making a very competitive machine performancewise, but with little to no hope ot seeing any return on that investment unless they managed to hit it big like Sony.

Remember that the chips will serve other purposes. When first announced, the EE was supposed to see application in high speed routers and other applications like that. Even if they aren't used until years after the consoles hit the market, it's still gonna represent revenue. Now Sony has a high-performance, fairly versatile chip sitting around that can be added into varioud devices. One less custom ASIC they'll need to build. If any of the Playstations ever nosedive, Sony as a whole will take a big hit though. Seems to me like Sony lives or dies with SCE now. PEACE.
 
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