In May of 2005, Microsoft announced the XBox 360 gaming console and launched it that November. Sony was expected to launch its competing Playstation 3 that same holiday season, but suffered delays due to hardware availability. The PS3 shipped with more advanced hardware, and the special lasers required for its included Blu-ray drive ran short. This shortage delayed the PS3's launch by a full holiday season, giving the 360 and Microsoft a clear upper hand in the gaming market.

This holiday season, as you may have heard, two new gaming consoles from the companies will hit the market. Microsoft with its XBox One; Sony with its PS4. Despite the controversy over privacy concerns and the functionality of used games surrounding the XBox One, both of these devices will certainly sell like hot cakes. So the better question is which one will be able to better meet demand?

The XBox One and the PS4 both feature:

  • AMD Jaguar Eight-Core Processors
  • AMD Graphics Processors
  • 500GB Hard Drives
  • 8GB RAM
  • Blu-ray Disc Drives
  • For a full list of hardware & features, click here
It's worth noting that the Sony PS4's RAM will likely be GDDR5, a high performance type of memory typically only used for graphics cards, developed by AMD, while Microsoft's XBox One will use traditional DDR4 RAM. 

In looking for a pressure point for failure, hard drives can be ruled out barring a regional catastrophe knocking out production as it did in 2011. The same goes for the Blu-ray drivse and Microsoft's RAM. In all cases, there are enough suppliers that the products have become commoditized and will still be readily available should one or two suppliers experience a shortage. 

The most likely pressure point will come from AMD. In both the XBox One and the PS4, the chip manufacturer is responsible for the graphics and computer processors. It also is the manufacturer of the GDDR5 RAM used by the PS4. AMD is also providing graphics processors for the third console in this sphere - Nintendo's WiiU. Other than the CPU, each of these components will be produced through the company's new and relatively untested Custom Chip division. AMD's struggles have been noted before -- even within this blog -- and the question of their capabilities to meet high demand across six products is a realistic one.

There are no backup producers of these products, and video game consoles are, at least at the beginning of their product lifespans, low-margin item, meaning success is dependent on a high volume of sales. Fully aware of this knowledge, Microsoft and Sony had to do a fair amount of due diligence before agreeing to put all their eggs in one single supplier's basket. 
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Nicholas Hamner

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