Sony recently unveiled its plans for the PS4, marking the start of the next generation console announcements. I have very mixed feelings about what Sony showed to the world, but it's left me with a few important take-aways.
The biggest lesson is that next generation console hardware will be built entirely from commodity parts. The PS4 will be x86 based with a GPU built by AMD; essentially, it's a PC. No more fancy, custom CPUs. Instead you will have off-the-shelf components. Sony didn't dwell on the tech specs of the console during their presentation, which initially was surprising to me but makes sense in retrospect. There was no reason to, because the architecture was not special. Right now, you could build a gaming PC from better components than what will be in the PS4. I'd bet that the next Xbox and Steambox will both have hardware very similar to the PS4: x86 CPU and commodity GPU by AMD or NVIDIA.
The next lesson is that software will decide the winner of the next generation. I think this conclusion is natural if you agree I'm correct that all next gen hardware will be commodity. No platform will have an edge in hardware, therefore they must differentiate through software. I think Sony realizes this and the proof is in their presentation. Features like cloud gaming/streaming (courtesy of tech by Gaikai) and more integrated social features (such as instant sharing, more tightly integrated friends lists, and communication) are primarily advances in software. There is little to no cutting edge hardware needed to make these features reality. Console manufactures will also need to provide dev kits that make incorporating these features into games easy. The appeal of the cloud is that it makes complicated systems easy to use and transparent to the user. Either it works flawlessly or it will be viewed as frustrating and broken. Transparent, flawless cloud systems are not easy to build.
So, if software will decide the next generation, who will be in the best position to win? Well, it's way to early to tell. However, we can look back to past performance to try and guess about the future. Historically, I think Sony has been weakest at producing software. As a company, their roots are in hardware. I can't point to one truly excellent piece of Sony made software. The dashboard/os on PS3 is not terrible, but I would not call it best in class either. In my mind, Sony has a poor track record of executing their ideas in software. They might get close, but I don't think they ever truly hit the mark.
I believe the biggest competition to Sony will come from Valve and Microsoft. Both companies are historically software companies that have grown hardware divisions. The PS4 hardware reminds me of the original Xbox: commodity PC hardware turned into a game console. As for Nintendo, they may be even worse at software than Sony. The Wii U appears to be fairly underwhelming. I'm not sure anyone really knows what to make of it yet and, frankly, it seems somewhat uninspired. I'll certainly be very interested to see what Valve and Microsoft announce later this year, but my expectation is that they will be able to innovate in software more quickly than Sony. In fact, it has already been revealed that a few of the important aspects of the PS4 announcement were aspirational. It seems the deck is stacked against Sony and the real test will be to see if they can execute on what they announced and deliver these features before their competition can.
You may feel that I've down-played hardware too much in favor of software. Perhaps that is true, but I feel like the current state of the game industry supports my argument. When I look at things like the Wii, Wii U, Kinect, and Playstation Move, I see lots of innovative hardware that, in isolation, is very impressive. However, I've yet to see a very compelling use of this hardware. Where's the killer game that really shows why I need this hardware? Maybe I've missed something big, but I don't think so. If you know of a game that makes great use of hardware like this, please point it out in the comments!