If you are up to date with the gaming news that’s been unfolding over the past few hours, you’ve probably heard that Sony’s pricing of their PlayStation 4 has undercut Microsoft’s Xbox One by almost $100. This unprecedented switch in pricing, perhaps, is indicative of what most gamers call the “third console curse,” wherein the platform holder on their third time out seem to think that their arrogance is impervious to any sort of negative effect on their platform’s sales. This infamous curse affected Sony on the PlayStation 3 when they announced the system at $499* (ironically the same price Microsoft is selling the Xbox One), Nintendo with the decision to stick with cartridges with the Nintendo 64, and Sega with the Sega Saturn with its high price point and U.S./Japanese hardware parity. While some are declaring the next generation to be Sony’s, I decided to look into how we got to this point in time and evaluate how Sony, perhaps carefully, executed the greatest console announcement assassination in the history of E3.

Before I begin, however, please keep in mind that much of this information was gathered via rumor sites and several forums. Each of these sources had corroborating information that either matches or makes sense, given the context of what they’re discussing. I by no means say that these are absolute truths, but I would like to engage in some sort of conversation as to what other scenarios could have happened.

The Next Generation

When Sony announced that the PlayStation 3 was going to be $499 in 2006, I don’t think many people at Sony thought that it was a good idea. This led to Mark Cerny, of Cerny Games, to basically handle the architecture for their next generation hardware. At the time, Sony’s investment on the Cell processor sounded like a good idea, but the reality of the processor is that they never were able to fully implement it across their entire cadre of appliances and electronics. I would further posit that, by looking at how developers struggled with the PlayStation 3, that most engineers just didn’t want to deal with an overly complicated piece of silicon.

The choice of giving Mark Cerny the keys to the kingdom of PlayStation is definitely a curious move, and certainly something I was not expecting at the PlayStation Meeting. Deified by forum posters with GIFs and proclaiming him as the savior of Sony to some, Mark Cerny started off as a developer with humble beginnings. Primarily known as the man responsible for Marble Madness, Cerny also had his hands on Sonic 2, Crash Bandicoot, Spyro the Dragon, Jak and Daxter, and the Ratchet and Clank series, making him a very experienced developer. But the real news to take out of Mark Cerny’s involvement is that finally, Sony didn’t stick with a Japanese engineer to create a platform for a predominantly Western developer base. As much as I’d hate to say this, game development hasn’t exactly been booming in Japan, so the choice to have Cerny create the architecture was a stroke of brilliance.

There was also a shift happening at Microsoft over the past few years that occurred. Peter Moore left for EA, J. Allard moved to a new division, and the various individuals responsible for the Xbox 360’s success at launch became a faint memory. One of the things Microsoft touted in the current gen is its 10 year cycle, which will set the stage for all the discussions we’ll have here. This 10 year cycle is turning out to be much shorter than Microsoft anticipated, with the next generation being started by the unlikeliest of the two competitors.

The Announcement

Not many people knew about the PlayStation Meeting in February of 2013. In fact, for the years that preceded that fateful day, Sony had always said that they wanted Microsoft to make the first move. Sony, in their current position, has never really tried to aggressively take out anyone since 1995, when the infamous PlayStation price reveal occurred. Sony was humbled by the reaction to the PlayStation 3’s price point and knew that, while they could possibly (or even probably) come back with the next generation, they needed to play their cards right and entice a lot more gamers into the PlayStation fold.

The PlayStation 3’s Cell architecture, coupled with a failure to meet the maturation of the gaming lifestyle brought about by Microsoft’s Xbox 360, ensured that Sony’s platform would be behind by at least a couple of years. In fact, it’s interesting to think back to when we did not have the ability to call the XMB while we were in a game or a movie, nor were we able to obtain Trophies in games on the PlayStation 3. For the first few years, Sony played catch up, while Microsoft ensured that Sony trailed behind with exclusive after exclusive.

But it’s also interesting to note that the opposite is also true. While Sony managed to gain back loyal supporters, despite the PlayStation Network outage in 2011, the creation of the PlayStation Instant Game Library was a huge boon for them. For $50 a year, you’re able to obtain a game… or two… a week! Microsoft then increased Xbox Live’s cost from $50 to $60, while unfortunately slowing down the base operating system with repeated updates, causing the current Xbox 360 to bloat and operate slower than any of the previous UI iterations.

It’s now believed that Sony’s February PlayStation Meeting slighted Microsoft so dramatically that when the event happened, rumors started circulating that the Windows borne company was going to have an event in April, ahead of E3. The trouble was that this whole time, Microsoft was running on several assumptions that cost them a lead in the next generation:

Sony was going to have DRM built into the system

Sony was launching the PlayStation 4 in 2014

Sony was going to be utilizing the base AMD Jaguar processor with 3GB of memory

Sony’s component costs were pointing at a $499 price point due to the cost of GDDR5 production

Couple these with a DRM strategy that was mismanaged by the corporation’s PR and executives and you had a hodgepodge of ill will going into the biggest video game convention in the world. Sure, they attempted to fix the problem by releasing an info dump of facts, but gamers weren’t happy despite the attempted clarifications.

The Hardware

Sources tell me that both the PlayStation 4 and the Xbox One, codenamed Orbis and Durango at the time, were practically the same platform during early 2012. Early reports of dev kits on both identified Orbis and Durango as using AMD processors with 3GB of RAM. Then, something happened around the middle of 2012 that would lead to a difference in component costs.

Microsoft gambled with using DDR3, a much slower memory, and instead using an onboard eSRAM on the actual processor itself. The eSRAM would allow the Durango to compensate for the lack of speed of DDR3 while at the same time increasing component costs.

Sony, on the other hand, gambled with the much faster GDDR5, a type of memory that was fast and had only been available on video cards. Unlike Microsoft, Sony wanted the speed of the RAM to do exactly that, so the processor was just a regular issue AMD processor.

In the Fall of 2012, however, Microsoft started having issues producing the processor. Because they had to embed eSRAM into it, the failure rate turned out to be really high. Rumor had it a while back that in order to lower the potential failure rate on the device in the wild that they would have to run the processor at a slower clock speed, thus lowering the temperature generated by the processor. This has not yet been confirmed, seeing as how Microsoft is coy about their specs these days, but there have been rumblings that the processor production is troubling at best.

In the same period, Sony’s gamble began to pay off, and in February 2013 during the PlayStation Meeting, not only did they say that they were using GDDR5, but that they also announced that the final system would carry a whopping 8GB of GDDR5. This announcement completely blindsided Microsoft, with the company expecting their competitor to do an unveiling next year given the 10 year cycle this generation was dictated to have, having been too focused on the production of their processor, and they felt that they had to regroup and realign themselves in order for people not to match both platforms bit by bit.

Microsoft pushed their Xbox One reveal by a month as a result.

This new angle positioned the Xbox One as an all-in-one entertainment system, not unlike Microsoft’s previous Mediaroom or WebTV experiments, where it married the web and your entertainment. This is an idea that Microsoft has been struggling with, and the Xbox One was an opportunity for them to get a cut out of that. The curious move drew the ire of gamers, mocking the whole conference as a very “dudebro,” in gamer parlance, kind of event… though the inclusion of The Price is Right was funny.

Smoke And Mirrors

As expected, Microsoft did not reveal specifics about the Xbox One at E3. Typically, Microsoft has been very upfront about their hardware specs in the past. It’s now believed that this is part of the realignment that Microsoft had internally so that Sony’s PlayStation 4 couldn’t necessarily be directly compared to the Xbox One, despite both being game consoles. Unfortunately, what they didn’t get correct was the messaging behind the DRM.

A few weeks later, Microsoft reiterated what we hoped wouldn’t be true. Considered as fairly draconian DRM by many, the Xbox One requires you to check-in every 24 hours and, in some cases, even every hour. Games are then treated more like licenses and are limited depending on either the publisher or Microsoft. Sharing games with your family would only be limited to 1 person at a time, as the Xbox One requires all games to be installed onto the hard drive and require online authentication.

Several months ago, a patent document leaked from Sony regarding a DRM scheme that was alleged by some that they’ll be using on the next PlayStation. Sony has since denied this, claiming it would be for another device, but the question that was asked remained in people’s minds. Also remember that Microsoft also had similar rumors as well and, just like Sony, they denied it. A source tells me that the patent document leak was actually Sony testing the reaction to a DRM scheme that would require games to check in every so often. Did Microsoft really think that Sony was going to do this, which is why they created their platform in the manner that they did?

What we do now know is that the PlayStation 4 does not do DRM. In fact, Sony was quick to point out that their games will, “never need to phone home every 24 hours,” and that they believed in the current lifestyle of gamers. Even before the next generation of systems was released, Sony has already won the mindshare of so many gamers.

The Coup De Grâce

A source was quick to tell me that the price of both platforms will vary depending on the situation of each platform holder. My source told me that Sony was seeking a price of $449 while Microsoft was aiming for the same price as well. The problem with the latter is that due to the component failure that occurred with betting on onboard eSRAM on the processor, the whole process requires more production and, by proxy, costs more. It was at that point yesterday, at E3, that Microsoft most likely had to make a judgment call: $499, or release later. Obviously, they didn’t opt for the latter.

Sony, on the other hand, undercuts Microsoft by $100, and the rest, as they say, is history. If you look at Sony’s announcement, the PlayStation 4 with the brand new Eye does undercut the Xbox One with the Kinect by $50, although Sony is making the Eye optional. There have also been quotes from Sony that said that they knew they were going to undercut the Xbox One, which corroborates all the information I’ve compiled here.

It’s been well known and documented with the books written by Dean Takashi that a lot of espionage happened between the development of the Xbox 360 and the PlayStation 3. Perhaps Sony figured them out and implanted false information to throw Microsoft’s leadership off? Regardless, Microsoft clearly underestimated Sony since the beginning of this generation: You can’t force everyone to stick to a generation because you said so. In a way, Microsoft’s proclamation that this generation was going to last for 10 years deluded the company into thinking that they had absolute control over the mindshare of the population. But tides turn terrible quick, and the same people who praise you in the industry will quickly turn on you. I think that’s the lesson Microsoft will need to learn as they follow, not lead, this generation of consoles.

*The PlayStation 3 launched with 2 configurations: 20GB for $499 and 60GB for $599.