AMD’s Xbox deal worth more than $3 billion

[Erazor51]

Ex-exec spills the beans

AMD stands to generate more than $3 billion in revenue on its custom APU deal with Microsoft. AMD has managed to win all three console designs this time around, so it could make a pretty penny.
The value of the deal was leaked by Bob Feldstein, an ex-AMD chap who defected to Nvidia. Since it is a multi-year deal, AMD should generate the revenue over the next five years or so. At the moment, AMD’s revenue is just north of $1 billion.

In addition to the Xbox One, AMD stands to generate heaps of cash on the PS4 and Wii U as well. Although we are talking about huge volumes, margins in the console chip market aren’t that big, but in any case the wins bode well for AMD.


Link: http://www.fudzilla.com/home/item/31504-amd%E2%80%99s-xbox-deal-worth-more-than-$3-billion

 

[5150Joker]

How much of that is profit after R&D plus support over the life of the console? Because revenue and profit are two very different things.

 

[sontin]

It's revenue. I think AMD will get <=$10 profit for every chip.

 

[SiliconWars]

double

 

[SiliconWars]

It's revenue. I think AMD will get <=$10 profit for every chip.

Keep dreaming Sontin, AMD are already on record stating that they get paid towards the top end of their client offerings for the PS4.

http://seekingalpha.com/article/135...-2013-results-earnings-call-transcript?page=3

We are excited about our semi-custom pipeline and the large opportunity for AMD to deliver semi-custom silicon with ASPs at the higher range of our client offerings.

 

[wand3r3r]

Keep dreaming Sontin, AMD are already on record stating that they get paid towards the top end of their client offerings for the PS4.

http://seekingalpha.com/article/135...-2013-results-earnings-call-transcript?page=3

It goes against his dream of AMD going bankrupt.

It will probably be fairly profitable, especially if they keep producing the chip for 5 years.

This goes against all of the marketing by nv that they didn't want it, they just couldn't compete without the GPU.

 

[Genx87]

3 billion over the life of the console? The 360's lifecycle will be what, a decade? I'd guess this console will have a similar lifecycle. 300 million a year or 75 million a quarter? Even for AMD that is a fart in the wind.

 

[Chiropteran]

300 million a year or 75 million a quarter? Even for AMD that is a fart in the wind.

"AMD reports $1.27 billion in revenue for Q3 2012"

75 million is a 6% increase. And this is from one of three consoles, if each of them offer similar results it could be as much as a 15% increase in revenue. How on earth do you describe that as a fart in the wind?

 

[EXCellR8]

console deals are exactly what AMD needed to boost revenue.

i think people forget how small of a percentage of gamers are on PC vs console.

 

[raghu78]

3 billion over the life of the console? The 360's lifecycle will be what, a decade? I'd guess this console will have a similar lifecycle. 300 million a year or 75 million a quarter? Even for AMD that is a fart in the wind.

there is a better estimate of what AMD stands to earn over the next few years.

http://blogs.barrons.com/techtrader...rie-ups-to-buy-bad-pc-market-notwithstanding/

"Our Japan Sony/gaming analysts Damian Thong and David Gibson believe both the Playstation 4 and Xbox 720 will begin shipping in 4Q13. While our checks indicate Sony‘s Playstation could begin shipping as soon as August, our base assumption (in line with our Japan colleagues) is 2.5 million Playstation 4 units and 2.3 million Xbox 720 units shipped in Q4 With AMD chips confirmed in the Playstation 4 and our expectation for a win in the X-Box 720 we have included the new business in our bottoms-up forecast. We note the business model should be different from AMD‘s existing Xbox 360 and Nintendo Wii U wins which were unit-royalty bearing agreements as opposed to selling finished chips. The processor used in the Playstation 4 is an eight-core CPU, based on the company‘s new architecture ( &#819;Jaguar‘), integrated with an AMD graphics chip. 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 3Q13 and $228 million in 4Q13, and raising our CY13 and CY14 revenue estimates."

http://seekingalpha.com/article/1451541-xbox-ps-4-the-big-winner-is-amd

"If Sony or Microsoft sell consoles at a similar pace over the next 5 years as the PS/3 sold, then the profit alone to AMD, at $70 for the SoC and 20% net margins, is worth around ~$1.50 per share to the company. That's from one console win. Since Xbox 360 and the PS/3 both sold similarly over their life cycle, factor in both of these wins as worth around $2.50 to $3.00 per share"

Sony PS3 (Nov 2006 )and Xbox 360 (Nov 2005) sold 150 million consoles in 6 - 7 years. also PS3 was the worst selling gen , compared to PS2 which sold more than 150 million and PS1 which crossed 100 million.

http://www.vgchartz.com/analysis/platform_totals/

so even with similar sales as PS3 / Xbox 360 , thats around 10 - 12 million consoles for Xbox One and PS4 per year. 20 - 25 million consoles at USD 60 - 70 . revenue around USD 1.2 billion - 1.75 billion per year. profit at 20% margin USD 250 - 350 million per year.

AMD's entire CPU division did just 4 billion in 2012. so 30 - 45% revenue increase and a very good profit stream to help the CPU division. In fact AMD might start reporting the revenue under a separate business unit.

http://www.amd.com/us/press-releases/Pages/tailored-products-2013may02.aspx

 

[sontin]

Ha, people really believe that Sony and Microsoft agreed to a "Pay or Die" contract. I guess they forget what nVidia did to Microsoft with the orginal Xbox.

 

[VulgarDisplay]

They stand to generate even more than 3 billion in revenue off of the deals if you ask me. At least off the PS4 deal because they have already hinted that they will likely begin selling a very similar APU using GDDR5 as unified memory. Pretty much free R&D and another way to capitalize on that R&D.

 

[raghu78]

Ha, people really believe that Sony and Microsoft agreed to a "Pay or Die" contract. I guess they forget what nVidia did with Microsoft with the orginal Xbox.

Sony and Microsoft chose AMD because neither Intel nor Nvidia could provide a competitive single chip x86 APU solution. Nvidia has graphics IP but no x86 and Intel has x86 but no competitive graphics. Also both Sony and Microsoft are going to pay for a single chip instead of 2 chips in the last gen. cuts their Bill of materials. cuts their motherboard costs and power/cooling requirements. you don't have to power and cool 2 chips. its simple.

 

[sontin]

It has nothing to do with x86. Microsoft went from x86 to PowerPc with the xbox360. They don't want to pay higher prices for nVidia and Intel technology.

And you have no clue what nVidia could have done. They developed a brand new chipset for the Xbox 1 which has a faster GPU they had on the desktop and the best audio chip at that time.

There is no problem for them to develop a ARM SoC with the graphics power of the Xbox One or PS4.

 

[VulgarDisplay]

It has nothing to do with x86. Microsoft went from x86 to PowerPc with the xbox360. They don't want to pay higher prices for nVidia and Intel technology.

And you have no clue what nVidia could have done. They developed a brand new chipset for the Xbox 1 which has a faster GPU they had on the desktop and the best audio chip at that time.

There is no problem for them to develop a ARM SoC with the graphics power of the Xbox One or PS4.

Did you miss the countless number of articles about how developers wanted x86 and Microsoft and Sony delivered it?

 

[raghu78]

Did you miss the countless number of articles about how developers wanted x86 and Microsoft and Sony delivered it?

his only purpose on these forums is to worship Nvidia and criticize AMD. :biggrin:

 

[sontin]

Did you miss the countless number of articles about how developers wanted x86 and Microsoft and Sony delivered it?

You mean the "PR" statements from developers who producing exclusive games for the consoles? Sure i read them. :awe:

 

[raghu78]

It has nothing to do with x86. Microsoft went from x86 to PowerPc with the xbox360. They don't want to pay higher prices for nVidia and Intel technology.

And you have no clue what nVidia could have done. They developed a brand new chipset for the Xbox 1 which has a faster GPU they had on the desktop and the best audio chip at that time.

There is no problem for them to develop a ARM SoC with the graphics power of the Xbox One or PS4.

ARM A15 is no match for Jaguar.

http://www.anandtech.com/show/6974/amd-kabini-review/3

"Clover Trail feels anemic by comparison and even Brazos feels quite dated. Seeing as how Bobcat was already quicker than ARM's Cortex A15, its no surprise that Jaguar is as well."

also Sony clearly stated why they chose x86

http://www.gamasutra.com/view/feature/191007/

"The hope with PlayStation 4 was to have a powerful architecture, but also an architecture that would be a very familiar architecture in many ways"

But none of this matters to you. go back to Nvidia worshipping :whiste:

 

[VulgarDisplay]

You mean the "PR" statements from developers who producing exclusive games for the consoles? Sure i read them. :awe:

Just like I read all those "PR" statements of PC/Console developers demanding an Nvidia developed cell phone processor on an architecture that has nothing in common with the PC platform that they would like to easily port their games to saving money and resources that could be put into developing better games.

Oh wait, they already did develop that. It's called the Shield and it will be an even more spectacular flop than the Wii U.

By all means continue to look silly just attempt to make AMD look bad. :awe:

 

[raghu78]

You mean the "PR" statements from developers who producing exclusive games for the consoles? Sure i read them. :awe:

you are such a pain. read this from John Carmack. id software develops multi platform titles. they are not tied exclusively to any platform.

https://twitter.com/ID_AA_Carmack/status/304607913853476864

 

[5150Joker]

ARM A15 is no match for Jaguar.

http://www.anandtech.com/show/6974/amd-kabini-review/3

"Clover Trail feels anemic by comparison and even Brazos feels quite dated. Seeing as how Bobcat was already quicker than ARM's Cortex A15, its no surprise that Jaguar is as well."

also Sony clearly stated why they chose x86

http://www.gamasutra.com/view/feature/191007/

"The hope with PlayStation 4 was to have a powerful architecture, but also an architecture that would be a very familiar architecture in many ways"

But none of this matters to you. go back to Nvidia worshipping :whiste:

Gotta agree with this, AMD was uniquely positioned to deliver a high performance APU. NVIDIA and Intel both lack on these fronts and TBH, I don't think Intel would even be interested unless they were paid exorbitant amounts of money. NVIDIA would also probably charge too much even if they had an x86 license. But yeah, if I were Sony or MS, I certainly would not want an ARM SoC in my gaming console--handheld would be another story.

 

[cplusplus]

But yeah, if I were Sony or MS, I certainly would not want an ARM SoC in my gaming console--handheld would be another story.

Which is why it's ARM in both the 3DS and the PSVita. In about 2-3, ARM will probably be able to scale up to the level at which they'd be viable inside a console-type system. But right now, they aren't even close.