Playstation 4, Xbox One and the Computational Funnel

This quarter saw the release of the Xbox One and Playstation 4 gaming consoles. To those of us that have been around a while it all seems so familiar. Newer, faster, better, brasher and the moniker 'next-gen' bandied about with glee by marketing departments.

Like others who've seen this cycle many times before, I find myself wondering if this will be the last of its kind. Since 2005 when the Xbox 360 was launched we've seen a seismic event occur with the introduction of the iPhone in 2007 and perhaps more importantly, the introduction of the App Store in 2008. Google has since followed suit and the mobile app has become the zeitgeist.

I remember seeing that announcement with the introduction of the more affordable – read, affordable – iPhone 3G and instantly realising what it meant. Suddenly, we'd see indie developers get a shot at reaching large audiences without the need for a publisher. I was thinking back to the one-man efforts of yesteryear like Frontier: Elite and SimCity. I was extremely excited. For once, I was right!

So we have a launch of a new wave of consoles set against the backdrop of a rapidly emerging mobile computing market. That alone is enough to make things interesting, but I think there's a bigger, more holistic context in which to put this. To illustrate, I'm going to liken it to a funnel.

I just read on the The Loop a throwaway remark made by Jim Dalrymple that this generational leap in performance for the gaming consoles wasn't as dramatic as previous ones. I disagree with that, but I see what he means. I'd slightly rephrase his sentiments as 'this leap isn't as impactful as previous leaps.' I'd also add the word 'yet.'

The computational power of this crop of consoles is many, many times greater than that of the 2005/6 consoles they replace. It has to be said, it's astonishing what is achieved with these machines given they are eight years old! Who still runs a PC or Mac that old, yet alone gets to run the latest gaming titles in full HD? The power leap is as enormous as ever, but it isn't producing the same 'wow, we couldn't do that before' effect.

Why is this? I think it's because we are emerging from a computing power funnel. How deep into the funnel we are is a big question. We might be sat pondering the same thing after another wave of consoles in another eight years, or we might be able to see that we have emerged. Let me explain.

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The Computational Funnel

So does this mean that the possibilities are endless? I don't think so. What it means is that we are approaching a point where computing power will be so great that it is no longer the bottleneck on what can be done with computers. At the same time, for all our impressive technology, it seems that time is teaching us that our computer technology is actually quite nascent in the grand scheme of things.

This leads me to two questions for the gaming industry and the hardware makers.

Hollywood Production Values

Over the last decade we've seen the advent of the game with Hollywood-level production values. Grand Theft Auto, Mass Effect, Assassin's Creed, Forza Motorsport et cetera are huge production efforts whose credits roll longer than most summer blockbusters.

More CPU/GPU speed and RAM theoretically allow more to be done by the user's computer or console but that doesn't mean that the full potential of that hardware is easily reached by the developers of its software. I think this is the effect we are seeing now.

Textures can get more beautiful, that's just a matter of rendering 3D models and artwork at a higher resolution. More instances of each element can be put on screen at once. What can't be stepped up with just a slider in a dialogue box is AI intelligence, fun factor, story. Those things need hard work done by talented humans.

That creates an interesting question to ponder; what can be produced procedurally by a computer unaided by a human? You might choose to model a car for a Forza title, for example. You might decide to stop trying to make a car's handling feel right and simply program every detail of the engine, chassis and bodywork of a car into highly accurate modelling software and let that software tell you what the handling for such a car would be like. The car gets more realistic – and more fun through being more visceral to drive – without the human developer needing to do more and more work for the gains. Once that master software is written, the human just needs to do the measuring of the real-world car components…once. As computers get more powerful, that computer model can be re-rendered using previously-taken measurements but at with a higher degree of accuracy. Don't repeat yourself.

What requires more work from a human being in order to improve? What limits the scope of a game by the manageable size of the team needed to produce it? This is the first question for gaming.

Product Cyles

The second question for gaming revolves around the distribution method of the hardware.

As we approach the mouth of our funnel, hardware power is becoming easier to package and mobile devices are showing us this in a dramatic way.

The 64-bit Apple A7 SOAC is approaching the power of a 2008 MacBook Pro. Think about that for a moment. The Xbox 360 and Playstation 3 were from 2005 and 6 and look what they can do. What will the A8 be capable of? The A9? It is not just faesible, but probable, that we will have a hand-held device in millions of pockets around the world that will be capable of running Xbox 360/PS4 titles within eighteen months.

Now factor in two existing facts. The Apple TV box that retails at £99 has an Apple A5 SOAC in it. It is also capable of facilitating AirPlay from any recent iOS device. What happens if Apple update that box in the summer with a year-old-at-the-time A7 chip? Suddenly, you're a controller away from a console with the power of a 2008 MacBook Pro. Second fact: Apple added controller support with iOS7. That console would have native support for third party controllers. Next year, it could have an A8, the year after an A9 and so on. Could Microsoft or Sony match that rate of power increase?

Apple could find itself a major player in the gaming hardware world within a year with almost no effort. If that isn't a concern for Microsoft and Sony then they are in for a big shock.

What About Non-Gaming Software?

Where I think we'll see the plateau is in non-gaming software. How much added value can endlessly more powerful hardware bring to a news reporting app or a word processor? We can add quicker streaming to an ESPN app but at some point it gets as fast as we could want. Non-gaming software is designed to fulfil a purpose and once that purpose is fulfilled it becomes a matter of doing it with more finesses, more intuitiveness. Those things are not endlessly aided by computational power. Designers need to put the hard graft in to make those things better. They also need taste and an understanding of their non-technophile fellow human beings.

…but I digress.

2013 iPhone Lineup

What Apple Stands For

Let's make this clear: Apple is not Samsung. The story that many have focussed on in the mobile space over the last year has been the rise of Samsung. What so few media outlets can be bothered to say, however, is that Samsung's growth has not come at the expense of the iPhone. On the contrary, the iPhone 5's sales have been excellent. What Samsung has done is eat up the market share of everyone else. It has dominated the market below a certain price point. Above that price point, it is still very much behind the iPhone.

People who take a cursory look at the mobile market – and sadly, this includes many mainstream media outlets – see Samsung's market share percentage and think that makes them the industry leader. That could not be more inaccurate. The share of the market Apple owns may be smaller in unit sales than Samsung, but the units they sell are of far greater value. It's akin to comparing Kia's marketshare to that of Jaguar Land Rover. They might sell more, but they have to sell 3-4 units to make the same profit.

This is what Apple has always done. Look at PC sales. Apple lags way behind the market in terms of units sold, but it dominates above a certain price point – the price point for which Apple chooses to make computers and the point at which all the profit exists.  Steve Jobs famously said that Apple 'can't ship junk.' They'd rather make beautiful hardware and sell only to the top end of the market than lower standards and try to mop up the far less profitable lower end of the market. Wouldn't you?

Apple doesn't sell a computer for less than £499. Their cheapest laptop is £849. They could sell a laptop for £299 and try to compete for the single-digit profit margin such a price point offers, but they don't want to. Why? Because doing so would mean making a piece of 'junk.' To illustrate how hard it is to make a profitable computer in that space look no further than the speculation that Samsung is pulling out of the laptop market.

What Apple Was Never Going To Do

Given this fact about Apple, why would anyone expect them to make a 'cheap' iPhone? The iPhone has succeeded in being something very difficult to achieve; it's an affordable yet aspirational product. A cheap iPhone would make it more affordable but less aspirational. It would also mean making an inferior piece of hardware (in fairness, some might argue they did that with the iPhone 5C but it's still a very high-quality piece of hardware).

As much as some people would love to see a £249 iPhone, that was an expectation borne out of a lack of understanding of what Apple does. Criticism of Apple for not releasing a £249 iPhone is as absurd as criticising Jaguar Land Rover for not releasing a £20,000 Range Rover.  The only difference is that instead of a Range Rover probably being out of most people's price range forever, the iPhone is affordable enough that anyone that really wants one can get one.

Problems Facing Apple

Apple is going through a purple patch that has lasted several years now. There's good reason for them to feel very happy about their current position. That doesn't mean, though, that there aren't threats facing the company. I see two main threats that Apple faces. 

• The emergence of the Asian market. Nearly two thirds of the world's population lives in Asia. The Chinese and Indian economies have been booming for years and they are at the point now where iPhone-class products are in demand. To ignore this emerging market would leave the door open for huge profits to be made by competitors and in the long term, huge leverage over the global market to be earned. Thusfar, the iPhone has not bowled over the Chinese market the way it did the North American and European ones, for whatever reason.
• Cheap phones got good. For a long time, the iPhone stood head and shoulders above the competition. Everyone with any sense wanted one, even if they couldn't afford one. Now, even cheaper phones made by the likes of Samsung are good enough. 'Good enough' is a dangerous thing in technology. Our human race has a depressing knack of being satisfied with 'good enough', eschewing 'great' for the most meagre of savings.

The iPhone 5C is Apple's response to these threats, not to Samsung's perceived encroachment in existing markets. When you set up a company you are often advised to carry out a SWOT analysis. This means writing down your Strengths, Weaknesses, Opportunities and Threats.

• Apple's strengths are industrial design, software engineering, vertical integration and logistics.
• Their opportunities are obvious: to be in Asia what they are in the Western world to an enormous market with tremendous potential for growth.
• Their weaknesses are that they must compete above a certain level in the market and that their products as of last week only came in two colours.
• Their threats are as above and in many ways the same as their opportunities.

Apple is bringing its strengths to bear on the Asian market and trying to mitigate its weaknesses and threats.

The iPhone 5C makes the second tier iPhone more appealing. Now it's a brand new product you are getting if you buy it, not last year's model. It's vibrant and fun. That should appeal in Asia and to the youth markets in the US and Europe. It's easier to produce which allows Apple to meet demand in a much larger market.

It's cheap enough to appeal the way the previous year's model used to to some, but it's expensive enough to remain an aspirational yet affordable product in the Asian market. 

The iPhone 5C is a serious injection of colour into the range

What Have They Done Before?

The iPod Nano was cheaper, but never cheap.

We've seen this before. The original iPod was white or black. It was hugely expensive. As time went on Apple brought the price down as manufacturing made that possible but it stopped at a certain point – a sweet spot where it was cheap enough that anyone could get one if they really wanted one, but it was expensive enough to retain perceived value to customers.  They then released  cheaper, less capable ranges of iPods in the iPod Mini, then iPod Nano and iPod Shuffle. These came in a variety of colours and were hugely successful. With the iPod range seemingly reaching the end of its life, or at least its life as a major product, it has never been a 'cheap' product in any sense of the word.

What Apple Should Get Credit For

The iPhone 5S' fingerprint sensor will grab the headlines and understandably so. If Apple has executed on this well then it could remove one of the few frustrations of using a smartphone. How many hours do you spend over the lifetime of a phone typing in its passcode?  It's that little bit of annoyance removed every single time you pick up the device. I think that's bigger than some realise at this point.

The fingerprint sensor also has other tremendous security implications. A huge number of people – Apple say as much as 50% – don't have any passcode on their phone. With the power of a modern smartphone, that's crazy. Also, how many people have short, easily-broken iTunes passwords because they don't want to remember a huge long secure code each time they make a purchase in the App Store or iTunes Store? With the fingerprint sensor allowing verification there too, people can set huge long passwords for these things without any added inconvenience.

Another thing Apple should get credit for is going 64-bit. Nobody was pushing them to do this. It opens up the road ahead of iOS devices and it shows Apple's engineering ambition. I think that deserves credit. 

iOS7

iOS7 is part of this release

We should be careful not to overlook that iOS7 is also part of this release. This is a significant, root and branch re-write of iOS. In many ways it is the biggest change people buying one of these new devices will see. When you combine the iPhone 5C with iOS7, you see this is no small release for Apple.

Time will tell if this set of products works or not, but at this point I think Apple and fans of their work should be pretty excited going forward. Criticism follows Apple's every move because they're uncompromising and different. I see no substance to the criticism this announcement is getting.  People say I always say that, but I'll keep saying it until Apple stops selling hundreds of millions of devices.

…but I digress.