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Nvidia VP reveals why they're not in the next-gen console race

Nvidia will be completely locked out of the market come next-gen, with Sony's PlayStation 4 confirmed to be using AMD chips, and the next Xbox largely rumored to do the same. So, what happened? How did Nvidia lose such a big market to its rival?

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Nvidia used to be a major player in the console gaming scene, having co-developed the GPU for PlayStation 3 and original Xbox. However, it appears Nvidia will be completely locked out of the market come next-gen, with Sony's PlayStation 4 confirmed to be using AMD chips, and the next Xbox largely rumored to do the same. So, what happened? How did Nvidia lose such a big market to its rival?

"I'm sure there was a negotiation that went on," Tony Tamasi, Senior VP of content and technology at Nvidia told GameSpot, "and we came to the conclusion that we didn't want to do the business at the price those guys were willing to pay."

According to Tamasi, developing console chips means you must sacrifice on other areas of development. "If we say, did a console, what other piece of our business would we put on hold to chase after that?" Although Nvidia is best known for their work on GPUs, they have a number of other projects--including its intriguing Project Shield handheld.

Of course, assuming console gaming doesn't die in the next generation, AMD must be pretty happy about its stronghold on the marketplace. Including Wii U, the company will be the exclusive provider of graphics cards for all three platform holders.

Andrew Yoon was previously a games journalist creating content at Shacknews.

From The Chatty
  • reply
    March 14, 2013 10:00 AM

    Andrew Yoon posted a new article, Nvidia VP reveals why they're not in the next-gen console race.

    Nvidia will be completely locked out of the market come next-gen, with Sony's PlayStation 4 confirmed to be using AMD chips, and the next Xbox largely rumored to do the same. So, what happened? How did Nvidia lose such a big market to its rival?

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      March 14, 2013 10:02 AM

      [deleted]

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      March 14, 2013 10:04 AM

      Sucks for PC porting

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        March 14, 2013 10:05 AM

        Well, not really, they're both x86 so much easier this time. They'll still optimise for the fixed platform, but it won't be such a pig as porting from PS3, for example.

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          March 14, 2013 12:03 PM

          It may be easier to port but that doesn't mean devs will be bothered to implement basic PC stuff like keyboard mapping, FOV adjustment, mouse sensitivity, or not capping FPS @ 30, ect.

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            March 14, 2013 12:13 PM

            Hopefully most devs follow what Watchdogs are doing. PC will be the lead platform. While consoles get the ports. This will probably change when the new consoles are out in the wild but I can always hope.

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          March 14, 2013 12:24 PM

          I have a feeling that if the on-die gpu of the AMD is any good for real gaming it might spark intel to start improving its integrated graphics performance. As of right now they are nothing to right home about which is why it surprised me they were using one for the PS4.

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            March 14, 2013 8:20 PM

            the AMD A10 can run games like bf3 and sr3 just fine and they only cost less than $150.

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            March 14, 2013 11:42 PM

            Uh, have you paid attention to the specs of the PS4? You're under an incorrect impression here. The GPU on the PS4 will be very powerful, far more powerful than any AMD APU. It is equivalent spec wise to the 7870 or 7970M. It is also using GDDR5 as system / graphics memory as well.

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              March 15, 2013 2:10 AM

              I have read the specs the little we have to go on. It is easy to say on paper paper that this will have X amount of raw TFlops but no integrated GPU has even come close to that. All the ones we have seen so far show them to be low-mid end of the spectrum. It is possible yes that they will have a custom chip that will be better. We will have to see when AMD does their refresh if they can deliver in this regard it is hard to say.

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      March 14, 2013 10:04 AM

      I'm glad to hear Nvidia is doing well, but I would be sad to lose AMD's competition. I wonder how long AMD will be able to play the high-end video card game with Nvidia.

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      March 14, 2013 10:07 AM

      I'm willing to bet that Nvidia ends up in Valve's steam box.

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        March 14, 2013 11:00 AM

        this....

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        March 14, 2013 12:22 PM

        I'll be surprised if Valve's steam box sells more than even the Wii U.

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          March 14, 2013 12:35 PM

          I'll be surprised if it doesn't.

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          March 14, 2013 12:44 PM

          Given how much people love Valve, I have a feeling sales will not be a problem.

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            March 14, 2013 12:55 PM

            Eh, they don't really have the global presence they would need and they'll be competing directly with PCs. I don't really think it's a matter of liking the company or not.

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              March 14, 2013 1:15 PM

              I think they have enough fans that they will end up causing a sort of perfect storm of interest/buzz about it that it takes off for mainstream people who don't really know who Valve are.

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            March 14, 2013 4:25 PM

            My thoughts are that the people who know of Steam/Valve already game from a competent PC. So why would they buy a separate unit?

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            March 14, 2013 6:13 PM

            All the people who care about Valve would rather build their own badass PC than buy a weaker all-in-one box.

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              March 14, 2013 6:35 PM

              If there is a version that can be a Big Picture mode sling box, I bet that high PC gamers would gobble that up.

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              March 14, 2013 6:37 PM

              If it hits the right price point, the version that primarily streams from my badass PC would be pretty nice.

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                March 14, 2013 6:52 PM

                Yeah that isn't going to happen. Not without special, expensive encoding hardware for your badass PC.

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                  March 14, 2013 7:42 PM

                  It's...one of the core features of the steambox.

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                    March 14, 2013 7:44 PM

                    Seriously, do you guys even pay attention to what you're talking about?

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                      March 14, 2013 8:40 PM

                      I think you need to watch the CES conference again. The only mention of streaming was this, and it's not mentioned as a main feature but rather a possible class of Steam Box. He actually went more into the fact that he didn't see streaming as a very good option:

                      "A Good platform might run you around $99, but Newell told he he hopes they’ll eventually be offered for free. For such a low price, there’s a catch: these Steam Boxes are intended to be a "very low-cost streaming solution," which means you'll need another more powerful PC in the house to stream games. Newell also said casual gaming could quickly be available on this end, which means a Good box will probably play casual games — games like the ones you might play in your browser, or on your smartphone. There’s still a lot we don’t know about devices in this tier, but the impression we got from Newell is that a Good box could be something like the Ouya, which is a small, $109 Android-powered game console that plays mobile games on the TV."

                      "While local home streaming is entirely feasible, Newell made it clear that he doesn't think OnLive-style centralized streaming of content over the wider Internet will ever really work. Distributing functionality over a network is one of the oldest problems in computer science, he pointed out, and having smart nodes at the ends of the network has turned out to be the best solution. "Cloud gaming works until it starts to be successful, when it falls over from its own success," he said. Furthermore, future gaming applications are only going to be more sensitive to the latency inherent in Internet streaming."

                      http://www.theverge.com/2013/2/6/3958162/valve-steam-box-cake
                      http://arstechnica.com/gaming/2013/02/valves-gabe-newell-foresees-living-room-pcs-inter-game-marketplaces/

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                        March 14, 2013 11:52 PM

                        He's talking about OnLive style streaming which is exactly NOT what I'm talking about.

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                          March 14, 2013 11:53 PM

                          In fact, that whole thing is specifically about how he's saying that in-home streaming from a PC is the point.

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                March 14, 2013 11:18 PM

                what does this mean? Valve can't magic up a new price point for PC hardware where margins are still good. The price of a PC is what it is. They're not suddenly going to cram $800 worth of components in a $500 unit with attractive design to boot. Unless you think Valve is suddenly interested in taking a huge loss on PC hardware and recouping it in software sales, but then they'd have to expect the Steam box to be a serious hit outside traditional PC demographics or else it'd be a complete waste targeting folks who would've just bought the hardware from someone else without Valve eating a bunch of money per unit.

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                  March 14, 2013 11:51 PM

                  It means basically exactly what it says, if it's reasonably priced and it streams from my PC, it'll be nice. I don't know why you're suddenly assuming random price points that I didn't mention.

                  Honestly, I thought it was pretty self-evident that it would have to hit a reasonable price point to be an attractive purchase but whatever, dude.

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                    March 14, 2013 11:55 PM

                    Also, from cetra's link

                    A Good platform might run you around $99, but Newell told he he hopes they’ll eventually be offered for free. For such a low price, there’s a catch: these Steam Boxes are intended to be a "very low-cost streaming solution," which means you'll need another more powerful PC in the house to stream games.

                    $99 seems like totally the right price point.

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                      March 14, 2013 11:56 PM

                      I'm pretty sure when most people talk about a Steam Box they're not dreaming about a Roku/AppleTV competitor for the same price as what already exists

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                        March 15, 2013 12:41 AM

                        I honestly don't give a shit what most people may be thinking about because I specifically described what I was thinking about in my post.

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      March 14, 2013 10:07 AM

      Sounds to me like a mistake to give up a presence on all three platforms, but presumably they've got their own internal data and strategic plans that tells them it makes financial sense. I'm wondering if they see something coming in the production resources market (silicon? Some rare-earth resource?) that will end up killing margins, leaving AMD locked into long-term unprofitable contracts. In which case, market share won't matter a bit.

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        March 14, 2013 10:22 AM

        Given their focus and success on mobile they may have just decided Tegra was a better use of their resources.

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      March 14, 2013 10:37 AM

      Sounds like AMD made amazing bids (or agreed the console makers' demands) and it wasn't going to be profitable for Nvidia to compete.

      It does make me wonder if this will hurt nvidia-PC optimization, or if it's not really a big deal.

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        March 14, 2013 11:22 AM

        AMD was able to give the consoles x86 and the GPU performance they were looking for, I think as Tegra (and RISC CPU's in general) become more capable we may see a shift next gen (assuming, of course, there is another console generation after this).

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      March 14, 2013 10:41 AM

      I use Nvidia GPUs but I'm glad that AMD got the console deals. I need AMD to keep Nvidia in check.

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      March 14, 2013 10:44 AM

      It all came down to money and AMD is probably selling the parts to them at a loss to make up for it down the stretch & long run


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        March 14, 2013 12:39 PM

        No, AMD was able to provide a single chip. If Sony went with Nvidia, then there would still have been a need to get a CPU from either Intel or AMD, thus considerably raising the cost to build the console.

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          March 14, 2013 1:00 PM

          Unless they wanted to go with RISC instead of x86 but apparently that's "not yet, if ever".

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      March 14, 2013 10:45 AM

      We can't sell our cards at 1000$ a pop

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      March 14, 2013 10:46 AM

      Aren't NVIDIA cards still considered the best? Or has ATI resolved it's driver issues that plagued them?

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        March 14, 2013 10:46 AM

        ATI AMD.

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        March 14, 2013 11:03 AM

        actually amd is now considered the fastest. But nvidia has alot more patented stuff that AMD cant copy or compete with that are powerful such as CUDA. but then again AMD computes better.

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          March 14, 2013 11:06 AM

          wait, since when and under what benchmark is amd considered to be the fastest....?

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            March 14, 2013 11:19 AM

            [deleted]

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            March 14, 2013 12:20 PM

            It depends on your definition. If you go by single GPU cards then Nvidia is faster and if you include cards with sli/crossfire on the same PCB then it is a toss up.

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          March 14, 2013 11:16 AM

          Your information is incorrect according to all the existing tests that are available. I mean, just the Titan proves your statement wrong. There's nothing even close to its single-board performance let alone an SLI configuration.

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            March 14, 2013 4:13 PM

            It also costs over twice what a single board AMD card does so it's ludicrous to compare like that. 2x 7970 is what you would be benchmarking against Titan.

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              March 14, 2013 4:28 PM

              He said 'fastest' not 'fastest under this arbitrary price point'

              Fastest = fastest, and that's the Titan for single-board single GPU, and 690 for single-board dual-GPU.

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        March 14, 2013 11:27 AM

        The 7xxx and 6xx are both great card series. They out perform each other depending on the game. So it comes down to those games, brand loyalty, or your budget.

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        March 14, 2013 11:29 AM

        That last big driver issue AMD had was with id's RAGE, Nvidia has recently had issues with the new Tomb Raider, though not quite to the same extent. PC gaming is fraught with issues and they'll never completely go away but for the most part they're on par there.

        If you exclude Titan, which is not price/performance competitive, the 680 and 7970Ghz edition come away pretty neck and neck at this point (I think AMD's been working really hard to improve relationships with developers and it's starting to pay off). If you include Nvidia's behemoth though it's no contest who has the fastest single GPU card at this point, if you're willing to pay.

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        March 14, 2013 11:47 AM

        It seems to me that the video card chip manufacturers are like hard drive makers - there's always going to be people with big issues with any vendor you pick so just pick one and stick with it as long as it tends to stay issue-free.

        Right now AMD is faster than Nvidia (or so the posters above tell me) but soon Nvidia will pull ahead. Then AMD. Then Nvidia. Then Matrox for a couple of days for some reason. Then back to AMD.

        Me personally I've just always stuck with Nvidia - I've almost never had driver issues with them (save for that corruption issue but even then it's easy to work around), they seem to have tried less bullshit over the years, and as a plus if you do have an issue you can just pester davinci1980. I tend to see the most bitching about AMD cards but that could be because I'm more prone to noticing those.

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        March 14, 2013 8:21 PM

        AMD out perform NVIDIA at most price points, especially the entry and mid level markets.

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      March 14, 2013 11:25 AM

      If in nvidia doesn't get their mobile / tablet act together they are finished. Selling cheap hardware to sony or MS isn't going to really pull them out of the rutt they have been in.

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        March 14, 2013 12:12 PM

        They're powering the OUYA console, they're working on the Project Shield stuff for portable gaming in close relationship with Valve and Steam, and like someone said above it's almost a sure thing a "SteamBox" would utilize nVidia.

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          March 14, 2013 12:16 PM

          Not to mention government and commercial contracts to add gpu's to server farms.

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          March 14, 2013 12:22 PM

          These things are not helping the share price. As far as wallstreet is concerned everything is going mobile, everything not mobile is dead or dying, so if a computer company is not dominating mobile and has a lot of eggs in the PC basket, they are expected to do worse in the future not better. If nvidia wants to grow, they need to get their shit together in the mobile arena.

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        March 14, 2013 12:37 PM

        Wut? Nvidia has $3 billion cash on hand, no debt whatsoever, and has made a profit for 10+ straight quarters. The only company in a rut that was referenced in the article is AMD, they are hemorrhaging cash like it grows on trees and have massive debt on top of that.

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          March 14, 2013 1:39 PM

          A lot of cash on hand, no debt, and profit every quarter isn't helping them grow the share price when the perception is they are relying on a shrinking market and are weak in the growing mobile market.

          What happens to nvidia share of PC graphics cards when intel and AMD get better GPUs on their cpus? What happens as more and more people use their phones, tablets, apple TV or whatever as a gaming machine as the years to come? Will there be people who buy cards for the desktop, yes, but that market doesn't seem to be growing, maybe only shrinking.

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            March 14, 2013 1:46 PM

            Do yourself a favor and admit that saying "they are finished" is ridiculous hyperbole. It's one thing to say they are struggling to adapt, but saying they are doing poorly or dying is just contrary to all evidence. They are a healthy company.

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              March 14, 2013 2:31 PM

              They are a healthy company that seems to be on a path to shrinking profits.

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                March 14, 2013 2:47 PM

                What metrics are you using for this data?
                Just so we're clear, the stock price is not an indicator for corporate profit. It's an indicator of investor confidence, which has repeatedly been shown to be wrong in predicting value and profit.

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                  March 14, 2013 4:15 PM

                  Nvidia is not dominating the mobile graphics market. They are not the clear leader for tablets or mobile graphics nor is it where they are making most of their money. Looking at notebooks people are wanting to buy notebooks that are thinner like the MBA and the ultrabooks. Those that are skinny use intigrated GPUs, gpus that nvidia can't supply. Only AMD and Intel really supply those.

                  So when trying to predict the future of nvidia, it doesn't look like their business should grow, it looks like it is going to shrink. I want it to grow but I don't think it. I also own a ton of shares from when nvidia was kicking ass, and I wish to get rid of them at a higher price than I can now, but wallstreet also thinks nvidia will not grow, so I am stuck.

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            March 14, 2013 1:49 PM

            The question is: Can AMD sustain itself at this pace to compete with NVIDIA?

            If I was nVidia, I would let them bite off more than they can chew, in hopes they fold under the pressure. Then the market is all theirs.

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            March 14, 2013 2:21 PM

            God bless the stock market.

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            March 14, 2013 2:33 PM

            Share price often has very little to do with a company's financial health. Intel's share price has been below $30 since 2004 and has experienced absolutely no growth in value, yet they busted out record quarter after record quarter in 2010 and 2011. Apple has marched two record profits every quarter in the past what, 3 years? And they're share price took a massive nose dive recently for no particular reason.

            Have you even looked into Nvidia's financials? They doubled Tegra revenue in 2012 over 2011. They'll have the absolute fastest Android chip on the market in 2013. They have their first fully-competitive LTE integrated SoC coming. They are expanding into cloud, they'll soon be expanding into servers, they'll finally crack into phones. Nvidia will be just fine, they are diversifying themselves at the right time. It's AMD everyone should be worried about. Your argument is pretty generic, based on uninformed opinions, and pointless. AMD, Intel, or a host of other companies could be inserted in place of "nvidia" and sound as "normal" as what you attempted to say. Formulate actual thought-out arguments, please.

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            March 14, 2013 8:33 PM

            You don't need a growing share price to do well as a company.

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        March 14, 2013 2:54 PM

        [deleted]

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          March 14, 2013 10:48 PM

          Yeah. Hopefully nvidia can pull it off as they did with tegra 3, but outright performance isn't the most important metric in the mobile space (although it is important). Balanced SOCs (ie efficiency) and user experience matter the most, which is why Apple is still designing around the A6. I haven't heard of the Tegra 4 winning any designs yet.

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      March 14, 2013 11:42 AM

      I saw that in a movie once. Peewee Herman fell off his bike and said "I meant to do that."

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      March 14, 2013 12:26 PM

      it was a bad move to exit that space entirely.

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        March 14, 2013 12:35 PM

        They are just more focused on the growth of SOC's in the mobile/tablet space. Can't say I blame them, I do not think the margins on a single chip can compete with the speed and growth of the mobile market..

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        March 14, 2013 12:37 PM

        I agree, they better be extra good to the PC crew for that will be their main crowd for sure.

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          March 14, 2013 4:34 PM

          Extra good = raising prices on already overpriced hardware.

          Can't wait :P

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      March 14, 2013 12:37 PM

      I am sure Sony and Microsoft drive a hard bargain and AMD would be easier to push around at the negotiating table. Also, Nvidia and Microsoft came to blows over the GPU in the original Xbox and hard feelings from that deal could still be lingering. If the profit margins are poor and Sony and Microsoft horde all the IP rights then Nvidia is probably better off focusing their design teams on the mobile market because if they can get a foothold there it will be much more lucrative than any contract Sony or Microsoft could offer.

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        March 14, 2013 10:45 PM

        What i've basically heard is that nvidia are pricks to deal with in terms of IP rights. Sony and nvidia had quite a rocky relationship with the PS3 as well - there was a lot of bad blood between them according to rumors. And MS definitely did not get along nicely with nvidia either with the original xbox.

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      March 14, 2013 12:41 PM

      They got outgunned in the negotiation phase. Talos bless capitalism!

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      March 14, 2013 12:52 PM

      Do you think this is already factored into AMD's stock price?

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        March 14, 2013 1:00 PM

        I don't think so at all. AMD hasn't made a profit in 6+ quarters, and their stock is sitting at 4 1/2 year lows (which had been it's previous low since 1990). I went ahead and snatched up a few shares about two weeks ago.


        Disclaimer: **I am no investing expert**

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          March 14, 2013 1:00 PM

          I think they've probably already been paid and that has factored in.

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            March 14, 2013 2:36 PM

            They aren't paid yet because it isn't a royalty deal this time. AMD is selling actual chips to Sony and MS because Sony and MS aren't allowed to manufacture x86 processors. If these next gen consoles sell anywhere close to as many as the current gen (150 million between xbox 360 and PS3 over the life of both) that will be an excellent revenue driver for AMD.

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              March 14, 2013 3:19 PM

              I hadn't thought about that but I had thought that they were just designing the chips for them, if they get a reoccuring revenue cut that will help a lot.

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      March 14, 2013 1:23 PM

      They must sell a butt load of tegra 3s, I wouldn't be surprised in they concentrated on the mobile/tablet/low power market. Thats where the future is for mass consumption.

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      March 14, 2013 1:46 PM

      That comment about the bidding pretty much confirmed what I was thinking. AMD is probably at a very thing margin to get both Microsoft and Sony. Heck, they might even operate at a loss up front if it means long term residuals.

      Either way, I don't see this being very profitable for AMD, but it gets their foot in the door with game developers using their tech and might give them a leg up in the PC space.

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      March 14, 2013 3:54 PM

      What does this mean exactly? "Of course, assuming console gaming doesn't die in the next generation"

      I just don't see this happening.

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        March 14, 2013 4:04 PM

        The publishers are complaining about the rising costs putting them out of business (thus they need to monetize in other ways).

        EA's lost money in 4 of the last 6 quarters and had 2 years of losses overall. -- Activision's doing fine.

        Note, I'm not defending that statement, just saying where the impression may be coming from.

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          March 14, 2013 4:20 PM

          I'd love to see why costs are so high. Are the actual developers actually getting paid bank (I'm ok with this) or are the industry execs paying themselves ridiculous amounts of cash or are the costs associated with utility? Is there any data on this anywhere?

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            March 14, 2013 6:42 PM

            I wouldn't be surprised if the actual dev was at the bottom of the list on pay-day. Probably have execs, marketing, and other unnecessary overhead siphoning the majority of the money.

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          March 14, 2013 4:24 PM

          Activison is doing fine for now. We'll see if they can adapt as Call of Duty and World of Warcraft decline.

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          March 14, 2013 4:24 PM

          it costs a lot of money to produce something that looks "current gen" pushing the bar harder takes serious time and headcount.

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      March 14, 2013 6:02 PM

      ITT no one knows how low profits are in making hardware for a console as a supplier

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        March 15, 2013 2:06 AM

        Oh no, we're only making 11$ per part on this console which will sell 100,000,000 units!

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          March 15, 2013 9:13 AM

          Yeah because design and support are free!!! And console guys are notoriously generous on pricing and I'm sure they'll pay whatever margin the supplier wants!

          You should talk to someone at Nvidia about how much they made off designing most of the Xbox or what they gained from it and you'll find out why they don't give a shit about this.

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      March 14, 2013 10:43 PM

      Basically what I'm reading is that nvidia wants to focus their limited engineering resources on Tegra. That doesn't sound unreasonable.

      A side effect, however, is that nvidia will lose significant ground in terms of their influence on developers. Already, most publishers have dropped from the The way it's meant to be played program and have switched to the AMD version (gaming evolved) - so far EA, Ubisoft, 2k games, and square enix have dropped nvidia completed and switched. I can't see that being good for nvidia, we've already seen the reasons why with sleeping dogs and tomb raider - both of these games run substantially better on comparable AMD 79xx parts. In tomb raider the performance different is completely lopsided even with the newest TR patch.

      I wish nvidia had put up more of a fight here. While there may not be as much money, this affects their influence on developers in a major, major way. Since next gen consoles are using AMD, it appears that everyone has dropped from "The Way Its Meant To Be Played" and have gone AMD gaming evolved. It'll be interesting to see how this plays out, and I don't think that will necessarily be good for nvidia - they will be playing driver catch up a lot just like they are with tomb raider right now.

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        March 15, 2013 1:05 AM

        "The Way Its Meant To Be Played" is just a splash screen that is bought and paid for. It has no "real" meaning.

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      March 15, 2013 2:17 AM

      RIP Nvidia. 3DFX come forth.

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        March 15, 2013 5:06 AM

        So does this mean I shouldn't have put an nvidia gpu in the gaming rig I built two months ago?

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      March 19, 2013 12:57 AM

      Reading between the lines makes me think they're not all that confident in the future of console gaming or perhaps more specifically, console hardware.

      Well good for them! Hopefully this will mean even better hardware for my excellent PC games. WOOT!

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