Nvidia passed on its hardware being used in the PlayStation 4 due to the "opportunity cost."

PlayStation 4: not powered by Nvidia.

"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."

"Having been through the original Xbox and PS3, we understand the economics of [console development] and the tradeoffs."

Announced by Sony earlier this month, the upcoming PS4 is powered by rival chip-maker AMD. The company is also strongly rumoured to be behind the hardware of the next Xbox, but Nvidia does not appear to be troubled by the loss.

"We're building a whole bunch of stuff," continued Tamasi, "and we had to look at console business as an opportunity cost. If we say, did a console, what other piece of our business would we put on hold to chase after that?"

"In the end, you only have so many engineers and so much capability, and if you're going to go off and do chips for Sony or Microsoft, then that's probably a chip that you're not doing for some other portion of your business. And at least in the case of Sony and Nvidia, in terms of PS4, AMD has the business and Nvidia doesn't. We'll see how that plays out from a business perspective I guess. It's clearly not a technology thing."

AMD will be hoping that its PS4 business pays off, having recently fallen on hard times. Earlier this week it sold its Austin-based HQ for $164 million to raise cash, while a leading analyst called it "un-investable" following an operating loss of $131 million in its quarterly earnings report.

In Nvidia's latest earnings call, the company posted a profit of $174 million.

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