Sales of PlayStation 4, Xbox Next to Hit Around 5 Million in Total in 2013

Microsoft Xbox Next and Sony PlayStation 4 to Bring AMD $288 Million This Year – Analysts

by Anton Shilov
03/19/2013 | 11:59 PM

Keeping in mind poor sales of Nintendo Wii U game consoles as well as slowing market of dedicated gaming platforms in general, financial analysts do not think that shipments of the next-generation game consoles from Microsoft and Sony Corp. to set records. Still, there will be around five million units of the two consoles shipped in 2013, which will be a good news for struggling Advanced Micro Devices, which will supply system-on-chips for the consoles.

 

“Our base assumption (in line with our Japan colleagues) is 2.5 million PlayStation 4 units and 2.3 million Xbox Next “Durango” units [are to be] shipped in Q4 2013,” said Shawn Webster, a analyst with Macquarie Equities Research, in a note to clients, reports Tech Trader Daily blog.

Since both Microsoft’s third-generation Xbox as well as Sony’s PlayStation 4 are based on semi-custom AMD Fusion system-on-chips with eight Jaguar general-purpose x86 cores, AMD Radeon HD 7000-derived graphics processors and other special-purpose hardware units, Advanced Micro Devices will be among the main companies to benefit from sales of the new consoles.

 

The analysts estimate that AMD will charge on average $60 per system-on-chip for PS4 and Xbox “Durango”, which will bring the company at least $288 million in revenue this year. Previously AMD only received royalties from game console platform owners for using chips with their technologies; starting from next-generation of consoles, AMD will sell chips to its partners. The improved earnings from console business will be shown as a major victory of AMD’s current management.

“We estimate that average selling prices for the company‘s game console business are roughly $60 due to its premium specifications. As a result, we are adding roughly $96 million of Sony/Xbox console chip revenue for AMD in Q3 2013 and $228 million in Q4 2013, and raising our CY13 and CY14 revenue estimates,” said Mr. Webster.

From many points of view, selling embedded custom APUs to Sony and Microsoft has a lot of advantages for AMD since it will naturally get more profit by selling chips than by getting license fees. On the other hand, the profit margin of such eAPUs will likely be rather low. Moreover, AMD will have to handle all the manufacturing and logistics issues, which may not be too comfortable for a company with limited resources.

AMD, Microsoft and Sony did not comment on the news-story.