Nvidia and AMD Place Bets On Next-Gen Gaming

Two of tech's biggest competitors are taking a very different approach to the next generation of gaming with Sony and Android, but which is making the right moves?

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Earlier this month, Sony took to the stage in New York and unveiled the PlayStation 4. And as expected, the internet--at least within gaming circles--went into meltdown. All the classic console-launch moments were there: visually striking demos, a new controller, masses of mind-numbing exec-speak, and yes, even talk of polygons. But the most interesting part of the presentation arrived early on. There, Sony revealed the hardware that would be powering its new socially aware games console, and it was a world away from the complex, supercomputer-power touted by the PS3 and its Cell processor.

With the PS4, Sony has taken what are essentially off-the-shelf PC parts and used them to build a console. That's exciting for lots of reasons: the system should be easier to develop for, and porting games from PC to console or vice-versa should be easier too. But the switch to x86 has ramifications outside of just games development. For the company behind the hardware in the PS4, it's a potential financial boon. That company is AMD, a US-based chip-maker that's been making chips since 1969.

Judging by AMD's current balance sheet, it'll no doubt be hoping that its place in the PS4 (as well as the Wii U, and potentially the next Xbox) proves lucrative. Just recently it sold its Austin-based HQ for $164 million to raise cash, while a leading analyst called it "un-investable" following an operating loss of $131 million in its quarterly earnings report. Those aren't pretty numbers for a company that was once trading at over $40 dollars a share: today its shares are worth a mere $2.60 each.

The question is how much those console deals are worth to AMD. While they're certainly not the only thing the company has going for it--its upcoming roadmap of APUs and GPUs have generally been well received--the console deals provide a steady stream of income. Indeed, the company noted on its end of year financial statement that declines in its graphics segment were "partially offset by a seasonal increase in game console revenue", so for AMD at least, the sector remains a valuable one. But its competition is fiercer than ever. Intel has gone from strength to strength with its desktop and laptop chips, while ARM continues to dominate in mobile, a market that is growing at an extraordinary rate: the most recent IDC numbers show tablet shipments at well over half of that of PC shipments and growing fast.

Judging by AMD's current balance sheet, it'll no doubt be hoping that its place in the PS4 proves lucrative.

That's bad news for AMD, which currently doesn't even have a mobile and tablet chip on the market. Meanwhile, Intel is slowly beginning to compete with its refreshed Atom CPUs, but it's AMD's other competitor that poses the greatest threat: Nvidia. For years now the two companies have been battling it out in the GPU market, and both have claimed to offer the world's fastest GPU in the past. But unlike AMD, Nvidia is posting record profits--around $174 million according to its last earnings call. And it does have a chip for mobile in the form of Tegra, not to mention it holds the current crown in GPU performance with Titan.

For AMD then, the console market is more important than ever. And that's not just from a monetary point of view: there's the potential to capture the hearts and minds of gamers and developers too. After all, if developers are primarily targeting consoles--which for the moment remains the most popular platform for playing games outside of Angry Birds--then it stands to reason they would choose to develop on AMD hardware, or make optimisations for console that are easily translated over to desktop AMD GPUs. That might not spell total disaster for Nvidia, but it could start a worrisome trend that sees developers and consumers move away from its hardware to that of its chief competitor.

It's a worry that we put to Tony Tamasi, the senior VP of content and technology at Nvidia: "Let's assume that you're right, and both Sony and Microsoft are built off an AMD chip", Tamasi told us, "we're actually kind of excited by it."

"Developers actually develop on a PC. The problem today is that when they target a console, they're targeting a piece of hardware that's more than an order of magnitude lower power than today's PCs. And frankly, that really holds back content developers. So while they could do amazing DX11 compute and awesome shader things on the PC, the fact that they have to support these very old, very low performance consoles (PS3, Xbox 360)--one of which is of course based on Nvidia--is a bummer. It impedes the content development."

"The fact the next generation consoles are kind of mid-range PCs is a good thing. From an optimisation perspective the next consoles are based on x86 CPUs, and based on essentially current generation GPUs, so there's really nothing special there. In the end, developers are trying to deliver the best experience on any platform that their game runs on. Having been through Xbox one and PS3, I can tell you that plenty of games that ran on a PS3 or ran on the first Xbox didn't have any uniquely optimised or differentiated behaviour on Nvidia on a PC than they otherwise would have had."

For Nvidia, it seems that any PC hardware in a console can provide benefits to the PC market, whether it uses the company's hardware or that of its competitor. Perhaps we won't see any AMD optimisations: only time will tell. Regardless, Nvidia has decided it doesn't want to be a part of the next-gen consoles: its hardware is nowhere to be seen in the PS4, the Wii U, or--if the rumours prove true--the next Xbox either. The question is, why not?

"Honestly, it's a business decision", says Tamasi, "having been through Xbox one and PS3, we understand the economics of that and the tradeoffs of that. We have a bunch of things going on. 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 one of those guys was willing to pay. We're building all sorts of chips for Tegra, we're building LTE modems, we're building SoCs, we're building GPUs, and we're building supercomputers. 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."

Unlike AMD, it seems Nvidia simply doesn't think that console market is worth entering either for the money companies like Microsoft and Sony are offering, or at the expense of other projects. Indeed, exactly how much AMD supplying chips to Sony and Nintendo contribute to the company's bottom line is a mystery, even if it is having a positive effect. But with the global video game industry predicted to reach $82 billion by 2017, there's money to be made. Of course, both companies already tap into it with their GPUs, while AMD's APUs and CPUs appeal to gamers on a budget.

"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."

For Nvidia, though, it's tackling the games market in a very different way. Outside of the high-end with its GTX 690 and Titan GPUs (the latter of which is in high demand at online retailers, despite the $1000 price tag), the company is looking at mobile for growth. That comes in the form of its Android-based handheld Shield, and the larger mobile market as a whole. It's a market that's forecast to be worth $203.8 billion by 2016, and drive volumes of over a billion units, figures that completely dwarf those of the games industry.

"[Mobile] is a growing market", Tamasi tells us. "It depends on the analysts you talk to, but I don't think that any analyst believes that they expect the console hardware market to grow like the mobile market has been and continues to grow. There's more than a billion smart phones sold every year. It takes years to get to 50 million in consoles sold. Mobile is an important business for Nvidia to be in. In fact, it may be that next generation of computing is mobile. And if that's so and the computing industry transitions towards mobile, Nvidia wants to be at the head of that not at the tail."

"We believe Android consoles could be big. We're supporting the Ouya folks, and we built Shield for goodness sake, which is an Android-based handheld device. It's not a console in the traditional sense, but it is a device purpose-built for gaming. I think that to us it's more of an expression that gaming continues to be alive and well, and there's no definition of what that has to be."

Therein lies the core difference between the two companies (outside of the PC). On the one hand you have AMD, which is sticking to the tried and tested home console market. And on the other you have Nvidia, a company that believes the future of the console lies not with the likes of Sony and Nintendo, but with Android, upstarts like the $99 Ouya, and its own Shield handheld. The popularity of the likes of Ouya and GameStick is undeniable, but even the $8.5 million Ouya raised as part of its Kickstarter campaign pales in comparison to the revenue taken in by current home consoles. Perhaps they'll remain a niche, albeit one that's seemingly more attractive and more profitable to Nvidia than AMD.

Both companies have placed their bets. And both companies have much to gain, and--more so in the case of AMD--much to lose. But whatever the outcome, it's gamers and developers who benefit. Developers will have more ways to get their games in front of people than ever before; gamers will have far more choice in how they play games, and how much they have to pay to do so. That's what's so interesting about the battle between these two giants of the tech world, and why the coming years will be some of the most exciting in the history of video games.

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Discussion

1052 comments
LukeWesty
LukeWesty

Power being utilized, thats the way forward.

People saying console's are dated lets look at the graphics Beyond two souls has?. Maybe there will be more powerfull PC's than the PS4, a lot more expensive aswell, main thing is that its utilized and these idiots who spend a ton on there PC and then look at the likes of Beyond two souls you and I know they will be able to make magic on the PS4.

vivalatour
vivalatour

I want a reverse/rewind and can do w/o a fast forward unless a game is completed because  " I AM NOT A CHEATER " ! and would really like to hear someone in the Big Game Creation World say " WE ARE NOT CROOKS " ! although WE have more money than God WE still promise to give you Absolutely The Best Games Possible so you to can share our presented wealth ! ... Thank You for your patronage and remember WE are your close friends !


KenTWOu
KenTWOu

"Having been through Xbox one and PS3, I can tell you that plenty of games that ran on a PS3 or ran on the first Xbox didn't have any uniquely optimised or differentiated behaviour on Nvidia on a PC than they otherwise would have had." 


But we still have games which were harmed by specific nVidia hardware. I'm talking about PC versions of Splinter Cell SAR and Splinter Cell Pandora Tomorrow. The latter is unplayable on modern hardware because of specific XBox compatible shadows, that's why you can't buy digital version of it on Steam.

Kenji_Masamune
Kenji_Masamune

it used to be back and forth with ATI and NVIDIA, last gen ATI won, this gen it's NVIDIA.  It's been said that the 680 chipset is actually scaled back to around 40% of it's actual power because if they were to actually release hardware that they are capable of, NO ONE would buy ATI because NVIDIA is that far ahead in tech.  But therein lies the anti-trust because if they crush ATI, then they are a monopoly, which will have all eyes filled with ire as the fed government gets involved.  That's why ATI has taken a tumble.  They are lagged so far behind, the are crippling the market.

badwedgie00
badwedgie00

ATI video cards have always given me the best performance and the longest endurance -- can't say the same for the NVIDIA cards I owned, but that's my personal experience. But, when friends or acquaintances ask me about video cards, I always recommend ATI.

LazyGamerX
LazyGamerX

AMD always has the slower GPU thats why their cheaper. The problem is and this has happened both times when I started looking for a new card is that when you start doing research on AMD and nvidia cards you'll see a LOT of people complaining that AMD's drivers are total shit. So even if you get one of their expensive cards the drivers are going to hold it back.

ahbs
ahbs

Excellent article

Stabba_The_Kutt
Stabba_The_Kutt

I would love to see Nvidia buyout AMD (or vice-versa). Market AMD as the standard cards and Nvidia as the premium ones. Have one central team working with the software devs and creating powerful drivers simultaneously. It would be a real win for developers and consumers.... But that will never happen. One of them will go out of business first.

Mik2303
Mik2303

Bought an ATi graphics card 3 years ago, and it still runs well, although there is a problem with its fan (all graphics cards have problems with fans eventually). At first, ATi had serious driver problems, but now it's all smooth. I'm still giving an edge on nVidia's cards though.

Anyway, the important thing is, PC gaming should be recognised and lifted above consoles. It's proof now that consoles are no more than Steam boxes, and non-upgradable ones.

badwedgie00
badwedgie00

Over a decade ago, I used NVIDIA; but I feel that the quality of their products have diminished over the years, and for nearly ten years now, I have used almost nothing but ATI, and it never once gave me a problem.  My last NVIDIA card was three years ago, and it died after a year of heavy use.  But my ATI card is still going...

neowolfgeo
neowolfgeo

Great Article. Very interested now in hearing from an AMD rep.

Still a supporter in console gaming.

TURBO-BURNER
TURBO-BURNER

Navida must be planning someting by the looks of things in my opinion

buschdeluxe
buschdeluxe

It would've been a good article if an AMD rep. was in there as well. As it stands It just comes off as an commercial piece for nVidia IMO.

JParkes
JParkes

What a load of bollocks! Sorry, but PS4's will not out power PC's. At the end of the day, I could spend £300 on a GPU and have more power than a PS4 today. The only reason people are going to buy PS4's is because of the exclusive games. I know that's my reason. I know for a fact a PC would have more power if I spent the same amount on a decent GPU.

GH05T-666
GH05T-666

I love NVIDIA its defiantly the best!

But please just stick to PC dont bother with handhelds and any of that stuff.

strothers101
strothers101

So my PC specs will wipe the floor with not only the console plebs out there but also most of the wannabe PC elitist's. This my friends is why PC is always the better option... I have an Intel iDerpalltheday processor with Hyper Derping Technology. I also have an nvidia  salad-dodger gtx 9292up GPU and 924298 GIGs of TDDR (Troll Double Data Rate) RAM . You just cant compete with that.

CptJohnnyRico
CptJohnnyRico

@Kenji_Masamune uhhhh, what? it still does go back and forth between amd and nvidia, AMD kicked the crap out of nvidia this round? 680 wasn't scaled back they just say that because they lost, why are you saying things that aren't true, everything you just wrote honestly makes you sound like an idiot

Lpedraja2002
Lpedraja2002

@LazyGamerX Well that has not been the case on this generation of cards.  AMD has the performance crown in a lot of price ranges and while true that drivers haven't always been on the level on Nvidia, the latest Catalyst drivers supposedly give a huge boost in performance.  Now, I don't own an AMD card but the reviews and benchmarks show they are the best value for your money.  Though I would prefer an Nvidia card due to better driver compatibility with games.

lx_Handwipe_xl
lx_Handwipe_xl

@Stabba_The_Kutt If that happens, god help us. Nvidia would have no competition and gfx card prices would go through the roof. We are already seeing it happen with the $1000 Titan. The gk110 chip would have been in the 680 but because AMD was surprisingly weak competition with their 7000 series, Nvidia changed their lineup and released their mid-range gk104 as the flagship (at the time). I can just picture the Nvidia executives cackling madly when they saw the initial benchmarks of the amd 7970.

chipwithdip
chipwithdip

@Darkitachi54 When it's about the graphics, people say "gameplay > graphics". When it's made by Nintendo, people say "graphics > gameplay". People are fickle.

Stabba_The_Kutt
Stabba_The_Kutt

@Darkitachi54 I've been video gaming since the 80's. It's always been (but not exclusively) about the graphics. And anyway, this article is more about the business than the graphics. You did read it right?

Stabba_The_Kutt
Stabba_The_Kutt

@Mik2303 "Anyway, the important thing is, PC gaming should be recognised and lifted above consoles." Way to try and start a flame war, buddy.

lyncer777
lyncer777

@badwedgie00 Yeah my Nvidia cards died and smells shit after that! so i feel ya my friend...

tmorri603
tmorri603

I think so. We know that know that the PS4 will use AMD but it is still a not clear if this is true with the new Xbox. MS did use Nvidia in the first Xbox. They might go back to them this time around.

Stabba_The_Kutt
Stabba_The_Kutt

@1soul Your little consoles are like leap pads compared to half the user's PCs in this thread. Now try to keep your mouth shut while adults are talking.

usuals
usuals

@1soul  if you didnt notice what the man in the article said , THAT all devs develop on PC's first and that you under powered CONSOLES are just holding the industry back!!!!!

Mkeegs79
Mkeegs79

@JParkes What doesn't he PS4 outpowering the PC have anything to do with this article. Save your PC fanboy panties for another day. Nobody is disputing PC tech is more powerful.

lx_Handwipe_xl
lx_Handwipe_xl

lol wut? Nvidia charges $1000 for the titan simply because they can. AMD has nothing to compete

GODSPEEDseven
GODSPEEDseven

@1soul @MikeFeeney431 HAHAHAHA!!! So who cares what a tournament is played on... haven't you read the article? The "Next-Gen" Consoles are like mid-range PC's...

Even the next-gen consoles won't be able to have UltraHD resolutions... while PC's and even games that have been created years ago will be able to play at UltraHD resolutions.

...not to mention, computers use hardware such as ultra-precise Laser mice, macro-programmable keyboards, can hook most controllers.. not to mention simulation-level hardware such as throttle sticks, steering wheels+shifters, joysticks.. even high-tech displays.. all the while I can have multiple monitors hooked at the same time, chat on one, game on the other... I can DJ with a PC, print out a recipe, use it as a multimedia home-theater device....

Consoles can play games..  if THAT'S ELITE.... ok, sure I'll go home to my PC, sit on my couch and use it for anything AND gaming at the same time. I'm glad not every console gamer is as ignorant as that comment you just posted!