This week, Sony announced some details for the next generation of the Playstation 3 (PS 3) game system. The new product will be called the Playstation 4 (PS 4) which makes sense because once you build a brand, you do not want to create confusion or disruptions with your customer base. From a technical perspective brand continuity is not as easily accomplished while making significant architecture changes between platform models. This is precisely the issue that Sony could have with the PS 4 because of the changes in embedded processing.

The PS 4 will now be using an x86 64-bit 8-core AMD  Jaguar processor as opposed to the Cell architecture used in the PS 3. In addition, a next generation AMD Radeon GPU will provide 1.84 Teraflops of graphics processing.  This embedded processor shift is attractive for game providers because there is likely to be more x86 programming expertise available than was the case with Cell, and the relative familiarity of the processing and graphics capability should allow more projects to be feasible.

If there is a negative note it is that the change in embedded processing architecture will result in the PS 4 not being directly backward compatible with PS 3 games. In other words, the PS 4 will not be able to locally run the PS 3 game disks. If allowed, the lack of compatibility could add a level of complexity to existing PS 3 owner consumer decisions including:

• Do I have enough physical space and unused TV connection ports for both a PS3 and a PS4?
• If so, will my all-in-one remote be able to operate both of them without a problem?
• If all of my PS 3 games will be obsolete, should I wait to see what the new version of the Microsoft XBOX 360 is like before I migrate to next generation gaming?
• At what point will there be enough new PS 4 games for me to consider abandoning all my favorite PS 3 games?

It is here that Sony’s July, 2012 acquisition of cloud-based virtual gaming supplier Gaikai makes sense because it can be leveraged by Sony to mitigate the backward compatibility issue between PS 3 and PS 4.  The user places a PS 3 game disk in the PS 4. The PS 4 identifies the disk as being legitimate, and acts as an interface between the game player’s activities, the local graphics display and the cloud based processing resources. This cloud based architecture, if it performs well, should mitigate the PS 3 to PS 4 migration problem, but we believe that questions still remain. For example, the business model for revenues for those cloud resources and who actually provide and pays them will be interesting questions.

Lastly, it appears from the PS 4 hardware description that the AMD CPU and GPU selected by Sony will be purchased as separate components. There are significant product design and performance advantages to combining these functions into a single semiconductor die or package. In fact, this was a key product strategy when AMD acquired graphics expert ATI in 2006. For Sony, having a separate GPU may allow a more efficient architecture for the cloud-based PS 3 compatibility and other services.