The successor to the PlayStation 3, apparently codenamed "Orbis," will use an AMD x86 processor with an AMD "Southern Islands" GPU, according to rumors emerging last week. Xbox 360's replacement, purported to be named "Durango", is also rumored to use an AMD GPU—either a Southern Islands variant or an equivalent to a Radeon HD 6670—this time paired with a PowerPC CPU.

Though these rumors are thoroughly unconfirmed at the moment, they're all well within the realm of plausibility. But if they prove true, the Orbis and Durango will be decidedly mid-range at launch when compared to top-of-the-line PC hardware. The Xbox 360, launched November 2005, and the PlayStation 3, launched November 2006, were both cutting-edge systems at their release. Their capabilities were unmatched by PCs of the time. If these rumors are to be believed, the eighth console generation won't be a repeat of the seventh.

The stupendous seventh generation

The Xbox 360's Xenon processor, a three-core six-thread PowerPC unit running at 3.2 GHz, had a theoretical peak number crunching throughput of 115 gigaflops. A contemporary Pentium 4 at 3 GHz had a theoretical peak of around 12 gigaflops when the system launched. The PlayStation 3 was in a similar situation; its Cell CPU, jointly developed by IBM, Toshiba, and Sony, had a theoretical throughput of 230 gigaflops. Contemporary Core 2 Duos were topping out at 24 gigaflops at the time—and cost many hundreds of dollars to boot.

The GPUs found in these systems were not quite so impressive compared to those available in desktop systems at launch, but they were still high-end. Xbox 360's Xenos was built by ATI, falling somewhere between the capabilities of its R520 (sold as the Radeon X1800 series, released in October 2005), and its R600 (retailed as the Radeon 2900 series, released in May 2007). The PlayStation 3's Reality Synthesizer was designed by NVIDIA, as a slightly cut-down G71 (marketed as the GeForce 7900 series, released in mid-2006).

In short, the (theoretical) CPU performance of the current generation consoles was out of this world when they launched. Their GPUs went toe-to-toe with discrete cards costing as much as the consoles themselves.

The (potentially) unexceptional eighth generation

The Southern Islands GPU, shipping in the HD 7970, has been on sale for three months already. With neither next-generation console likely to hit the market until 2013 (and probably late 2013 at that), Southern Islands will be the best part of two years old when those systems finally hit. Southern Islands is a fast and powerful GPU, but it's already lost the top performance spot, displaced by NVIDIA's brand new GTX 680. It'll be falling further behind with the launch next year of AMD's Sea Islands GPU architecture. If the next-generation Xbox really does use a Radeon HD 6670 part, it'll be even less impressive.

Estimates of CPU performance are harder to make, given the dearth of information about these consoles. Being realistic, we can't expect any great leaps for the CPU either. If AMD could produce processors that were competitive with or superior to current shipping x86 processors, it would be doing so. Unfortunately for AMD, its newest Bulldozer architecture hasn't reached the performance levels the company originally announced. The next-generation PlayStation CPU could be a Bulldozer derivative, or it might be based on the company's low-power Bobcat design. In either case, it's unlikely to boast the kind of remarkable theoretical performance that the Cell claimed relative to its contemporaries.

Seventh-generation consoles leapfrogged the top-level PC performance of the time. The systems were enormously powerful, and enormously expensive to build. Both Microsoft and Sony sold them at a considerable loss for their first few years on the market. Thanks to these subsidies, they offered phenomenal value for the gamers' dollar, affording gaming experiences that would be prohibitively expensive for PC gamers to mimic at launch. If the current architecture rumors prove to be true, eighth-generation consoles aren't going to pull off the same feat. They'll be a substantial step up from current console hardware, sure. But they likely won't be able to offer the same wow-factor the seventh generation did.

If Sony and Microsoft have indeed slowed down their console hardware arms race, building for more modest specifications instead, then this could be good news for everybody—except perhaps console gamers.

The cutting edge has lost its point

Cutting-edge hardware is expensive to produce. While Microsoft could probably stomach another round of massively subsidized gaming hardware, Sony probably can't. Subsidized hardware is a risky proposition. More modest systems, selling perhaps at break-even at launch, are much more palatable to shareholders and beancounters alike. Nintendo and Apple have both demonstrated that selling hardware profitably can be done successfully. This is certainly the more sustainable model for the long-term health of the industry.

Cutting-edge hardware is also, arguably, pointless for a new console. While PC gamers can always slap on a huge 2560×1600 or 2560×1440 monitor—something that taxes even dual high-end video cards these days—consoles are for the most part limited to the 1920×1080 at 60 Hz that HDTV sets allow for. 3D sets, which ideally need 120 frame per second inputs, do raise the bar somewhat, but speccing the GPU for this niche audience would be a foolhardy endeavor. It would make the GPU more expensive for 100 percent of customers, with benefits seen only by a handful.

Contemporary CPUs are already overkill for many games. Developers have struggled to exploit the large numbers of hardware threads that processor designs now support. Even a good-looking and moderately physics-rich game such as Battlefield 3 rarely demands more than three cores of a current Intel Sandy Bridge processor. There are games that can take more advantage of multiple cores, but they're the exception, not the rule. As long as the CPU is at least adequate, the GPU is probably the best place to invest money.

With a 1080p60 graphical upper limit and recognition of the complexities of multithreaded programming, there isn't a compelling case for building hardware that's streets ahead of what we have today.

Media machines

Keeping the hardware inexpensive is also important for another reason. Modern consoles aren't just used for games. Xbox LIVE Gold subscribers spend more hours per month watching streaming TV than they do playing games. This is a burgeoning market that greatly expands the appeal of games consoles—console gaming is still a niche activity; watching TV isn't.

Streaming media has mainstream appeal in a way that games won't achieve for another decade or two. It's an audience worth going after, but it changes the economics of console hardware development substantially. The game consoles can be subsidized and sold at a loss because each game also includes a cut for Sony or Microsoft. As long as gamers buy a handful of games, the money can be recouped. Boxes used predominantly for streaming media don't provide access to that same revenue stream.

Microsoft does still make money from some streaming media users, since many services are locked behind its Xbox LIVE Gold paywall. But with competition from other set-top boxes with comparable streaming capabilities and no monthly cost, it's not clear if this is sustainable. To accommodate, selling the hardware can't incur losses—which means it can't include expensive, high-end components.

Good news for developers

The more conventional system architecture would be good news for developers. The current Cell architecture in the PlayStation 3 has proven difficult for developers to make the most of. Its design—a single PowerPC core with eight simple but fast vector cores (of which six are usable by third-party developers)—is quirky. The Xbox 360, with its three identical cores and six hardware threads, and the PC are both easier to use and understand.

This is not to say that the next generation PlayStation will necessarily be identical in design to a PC (though that has been tried before, with the original Xbox). Sony and AMD might have a few custom tricks up their respective sleeves. AMD's plan is to produce highly-integrated systems-on-chips, and the company has said that it's keen to include additional processing units in these designs. It's easy to envisage a custom-produced design that combines perhaps 2 or 4 CPU Bulldozer or Bobcat threads and a Southern Islands GPU—both "standard" AMD parts—with, for example, a high-speed memory unit, or a dedicated vector processing unit similar to those found in the Cell processor.

A conventional design means developers can take full advantage of the hardware much earlier in its lifecycle. As a rule of thumb, games released later in a console's life look better than those released earlier. Early in the console's life, developers don't yet know the best way to wring out every last bit of performance from the system. The more unusual and complex the architecture, the longer it takes to understand how best to use it.

While the hardware companies might not like it, developers like systems that aren't strange outliers. Most major games from major publishers are not exclusive to any one platform. Huge franchises like Call of Duty are cross-platform titles, released for Xbox 360, PlayStation 3, and PC. As a result, these games tend to be developed based on the lowest common denominator. A PlayStation 3 might be particularly good at a particular task (a fancy graphical effect, say), but if the Xbox 360 and PC aren't equally adept at that same task, cross-platform developers will have no option but to ignore the PlayStation 3's aptitude, or spend a lot of development time tuning a version specifically for the system.

This might mean platform exclusives don't have any special capabilities to take advantage of, but with platform exclusives normally negotiated according to studio ownership or cash payments—rather than the nature of the hardware in question—the impact of this is likely minimal.

An AMD victory

If AMD has scored the GPU design win for the next Xbox, and both the CPU and GPU designs for the next PlayStation, this is enormously good news for the company. It will provide a steady stream of income for many years to come.

It might also help the company undermine NVIDIA's attempts to court game developers. NVIDIA's "The Way It's Meant To Be Played" promotional program sees NVIDIA work with developers to some extent to help market or develop their games. In theory, TWIMTBP games are developed on and developed (or at least, optimized) for NVIDIA hardware. In practice, the extent varies; some games are developed on NVIDIA hardware with NVIDIA offering advice with performance tuning. For others, the branding is applied only after development has been completed, purely so that publishers can take advantage of NVIDIA's marketing and promotional dollars.

At a minimum the games should run reliably on the company's hardware; it may or may not contain additional tuning to ensure optimal performance on it.

With both next-generation consoles using Southern Islands, it's inevitable that games for these consoles will be developed on, and developed for, AMD GPUs as their first priority. NVIDIA will still have a role to play, as its GPUs will continue to be found in PCs. But with consoles taking the lion's share of the market for most games, optimization for NVIDIA is unlikely to ever rival that for AMD.

What about the gamers?

While bad news for NVIDIA, it's probably worse news still for another demographic: current PlayStation 3 owners. The radical shift in architecture, from Cell with NVIDIA graphics to x86 with AMD graphics, means that the next generation PlayStation is unlikely to offer backwards compatibility with existing titles (rumors are already pointing towards Sony removing this feature, in fact). Emulating Cell on the CPU will be impossible, as the CPU simply won't be fast enough.

Sony could potentially integrate a Cell processor into the new system. The company did a similar thing with the PlayStation 3; initial models included the PlayStation 2's Emotion Engine for backward compatibility. Then Sony dropped the chip as a cost-saving measure in 2007. Adding hardware purely for backwards compatibility is hard to justify on a cost basis: the older games have limited appeal to new buyers, and even existing PS3 owners could continue to use their old hardware. There's an outside chance the GPU could be roped in to allow Cell emulation, or that a vector co-processor could be integrated into the CPU. But in all likelihood, the next PlayStation will break from Sony's backwards compatibility trend.

Console gamers of all kinds may also be disappointed the new machines won't be as tremendous a leap over current systems as past systems have been. Consoles have already been eclipsed by PCs—with a result that games like Battlefield 3 offer PC players larger maps with more players than the consoles can cope with—and it looks like that will still be the case come the eighth generation.

If current rumors are to be believed, the next generation of Sony and Microsoft consoles will gain performance parity with PCs, but not much more. Consoles will still have their advantages—the range of peripherals, the plug-and-play simplicity, the reduced maintenance, the low up-front cost—but they won't be able to offer best-in-class gaming, even at their debut. For that, only a PC will do.