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After the presentation of the two most important new generation gaming consoles, the Sony (NYSE:SNE) PlayStation 4 and the Microsoft (NASDAQ:MSFT) Xbox One, we can already draw some conclusions. And the main one is that, at least amongst gamers - which are probably the early adopters in this space -- the PlayStation 4 is looking like the clear winner.

Not entirely a surprise

This is not entirely a surprise. Both gaming consoles share a very similar architecture built around an Advanced Micro Devices (NYSE:AMD) APU consisting of a rather weak 8-core CPU and a rather powerful GPU. However, it's also this similitude that makes it easy to understand that the Sony is a significantly more powerful machine than the Xbox One. This is so because:

  • The PS4 GPU has 18 execution units versus Xbox One's 12. This makes it around 50% more powerful;
  • The PS4 carries 8Gb of GDD5 memory while the Xbox One uses 8Gb of slower DDR3 RAM. This is very fast memory of the kind used in top-end GPUs, but here accessible both to the GPU and CPU. Memory bandwidth on the PS4 will thus be around 3 times higher in the PS4 than in the Xbox One. The Xbox tries to somehow compensate for this with 32Mb of eSRAM, but this will both make the system harder to explore and optimize and not nearly match the PS4;
  • Due to the Xbox One's compromises in OS architecture, with the system running 3 different OSs, the PS4 will be able to allocate significantly more RAM memory towards games, up to 40% more than the Xbox;
  • While depending on game publishers, it's likely that the DRM efforts on the PS4 will be less severe than in the Xbox. This is more gamer-friendly.

All in all, the PlayStation 4 simply seems better for gamers. Some might question if the added hardware power will mean anything for games, due to the bad experience with the PlayStation 3 -- which was theoretically more powerful than the Xbox 360 but ended up "not delivering". But this time is, indeed, different. The PlayStation 3 did not deliver because its architecture was harder to explore than the Xbox's. Such is no longer true. Not only are the two consoles of a similar architecture, but if any of them sounds to be more complex to explore, that is the Xbox.

In short, from a gamer perspective the PlayStation 4 has won this round and that's likely to translate into the early adopters favoring it over the Xbox one. A price that's 20% lower, at $399 versus the Xbox One's $499 also helps (though the PS4 does not carry the Sony Eye at that price while the Xbox One does include a Kinect - more tailored for casual gamers).

This is borne by the first data that's emerging

This conclusion that the PS4 will be favored by the gamers isn't just idle conjecture. The first hard data that's emerging confirms this. For instance, with Amazon.com (NASDAQ:AMZN) taking on pre-orders for the two systems, the PS4 is taking several of the top places in the "Video Games" category even though its demand is spread across several bundles whereas the Xbox, having just a single SKU, stands in second (Source: Amazon.com):

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Also, Amazon.com is running a Facebook poll on which console is superior. The results speak for themselves - PlayStation 4 is overwhelmingly ahead:

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The jury thus seems out. At least among the gamer/early adopter community the PlayStation 4 is the clear winner.

Longer-term, it's harder to tell

Longer-term, however, it's harder to tell. Microsoft made a significant bet on its media capabilities, including such things as "HDMI in" to better integrate the Xbox into a living room entertainment center. The Kinect is also theoretically superior to the Sony Eye when it comes to casual gaming.

The Xbox could thus conceivably appeal a bit better to a mainstream audience, after it loses the battle for hard-core gamers. Unless at that point network effects kick in, that is. If the gaming world is increasingly dominated by massively multiplayer games, then it might happen that the console to win the opening wars has a further advantage down the road. This is somewhat mitigated by the fact that some of the multiplayer games will work across consoles, of course.

Fundamental relevance

In the last 9 months, the Microsoft "Entertainment and Devices division" had $8.23 billion in revenues out of a total of $58 billion, so it represented 14.2% of Microsoft's revenues. At the same time, it had operating earnings of $944 million, which was 4.6% of Microsoft's total operating earnings (Source: Microsoft 10-Q).

As for Sony, its "Game" segment had revenues of 865 billion yen in the year up to March 31 2013, this compares to Sony's overall revenues of 7181 billion yen, so it represents 12% of these revenues. Regarding operating earnings, the "Game" segment had operating earnings of 48.5 billion yen which represented 19.4% of Sony's operating income before corporate overhead (Source: Sony)

What these numbers tell us is that the gaming division is relatively much more important for Sony's earnings than it is for Microsoft's - it's thus not a surprise that Sony took no chances with the gaming appeal of its machine, spec-wise. These numbers also refer to the old generation gaming devices, and are likely to expand somewhat with the launch of this new generation, at least in the next year or so.

Conclusion

With the first bits of data coming in, it seems like the clear winner for the hearts and minds of the gaming early adopters in the new generation console wars was the Sony PlayStation 4. With Sony having less and less significant business to hang on to, it could not afford to lose this war and it fielded a console that's technically quite a bit superior to the Xbox One and at the same time, significantly (20%) cheaper to boot.

This was not lost on the gaming community, which at this point seems to be voting with their wallets by handing Sony the prize, though we're just talking about pre-orders and polls at this point.

Source: At This Point PS4 Is Looking The Winner Over Xbox One