AMD picks up the R&D tab for this generation of consoles.
When the Xbox 360 and PS3 first faced off in the market, both companies took a bath on the hardware. The custom designs pitted two companies with two very different architectures against each other in the market, and consumers really had no way of knowing which was superior. Seven years later the general conscious seems to give Sony the slight nod when it comes to pure console performance potential, but ultimately Microsoft was much better at exposing functionality to developers. PS3 exclusives tended to feature tons of eye candy, but cross platform titles always seemed to work slightly better on the 360. Fast forward to 2013 and both companies appear to be targeting a super charged PC architecture powered by AMD, and as a result, they might actually make money this time.
Sony CFO Masaru Kato reassured investors on their most recent earnings call that, "Unlike PS3, we are not planning a major loss to be incurred with the launch of PS4. At the time we developed PS3, we made a lot of in-house investments to develop the chip, the Cell chip," he explained. "Development of the chip saw the silicon processing and all the facilities invested by us ourselves. But this time, yes we have a team working on chip development, but we already have existing technology to incorporate and also product investment and all the facilities will now be invested by our partners, other foundries, so we don't have to make all the investment in-house."
Making a profit off each console will make a huge difference for Sony who continues to struggle to maintain dominance, but not if it means the price tag comes in north of $400. Consumers have become conditioned to pay less for consoles, and those with a serious budget have turned to the PC. Comparing Sony and Microsoft hardware will probably be much easier this generation, so hopefully the competition will the keep pricing in line, and console games just need to pick an ecosystem.