As of the last generation with the exception of Nintendo, every console was sold at a loss at launch in order to encourage gamers to purchase their console. The Playstation 3 just became profitable within the last three years despite being on the market for over six now and as Microsoft had issues with heating in the early model of the Xbox 360, Microsoft wasn't able to keep the money flowing as they anticipated due to the Red Ring of Death. Nvidia wants to go the same direction that Nintendo did in releasing Project Shield for a profit at launch.
Engadget yesterday reported that the new handheld will be making money for the graphics card company with a simple quote from a representative saying this: "We'll make our money by selling the device to gamers." With the way the product was presented, I'd hope so since there is a potential that gamers won't even use any of the Nvidia services to get their entertainment value out of the device. Now the first question that pops into my mind is how much will it cost at launch and with a quick follow up question to evaluate how truthful their statement might be: how expensive will it be to create such a device.
Let's start by evaluating the technology that they plan on bringing to the Project Shield. Including a controller larger than a 360 controller, 5 inch LCD 720p display, Tegra 4 processor and traditional computing support manifolds for the circuit board, there is a lot being put into this small device but comparatively we have no way to compare since there won't be any pricing details released until the device is released into the public so we have to compare similar components and devices dating back to their release date while including minor inflation. Let's start off with the most simple component: the processing chip.
The Tegra 3 was released in the early fourth quarter of 2011 (14 months ago) and while there were three different models for the chip, mechanically they all stayed very similar when it came down to specifications for the device. This time around, we already have some details but not many of the processor. As the Tegra 3's highest CPU rate clocked in at 1.6 GHz without overclocking, the Tegra 4's will be able to clock in at 1.9 giga-hertz at most. The CPU cache will remain the same as the previous models but the graphics processing unit will use twice as many cores compiling into one of the most powerful processors released. Including in all of this, the device will also support network compatibility with speeds reaching up to 100 megabytes / second using Nvidia's i500 software modem.
Comparing of the previous price according to Softpedia of over $25 for the Tegra 3 back in 2011, I can easily say that the Tegra 4 will probably launch with at the production cost rate of at least $48. So thus far we are half of what the Ouya cost during it's Kickstarter campaign with only one device. Next component that we'll dissect is the Xbox 360 controller.
According to a 2006 report by Daily Tech, the controller at that time cost only $11 for the wireless version. With less components, I could believe the wired version costing only $10 but as Nvidia doesn't plan on releasing a wired version of Project Shield there is no point in speculating on that particular price. Diving deeper into the original report by EE Times, the controller was created for such a small price to balance out the cost from the original Xbox 360 console as there were only two models that weren't very profitable at the time.
The wireless model, if you recall, came out with a standard two AA battery pack but also came with a rechargeable 'nickel-metal-hydride' battery. Additionally, there was a headset port to allow players to plug in their headset or, what would eventually release in 2008, the qwerty keyboard adapter. The Xbox 360 controller offers the vibration feature by two different motors: one of higher frequency and one of lower. As the device won't be connecting to another device directly, the wireless 2.4GHz transceiver cost could be traded to that of connecting to Wi-Fi or potentially 4G hotspots.
Additionally, the Shield will cost more with it's HDMI port, Micro SD port & Micro USB port comparing to the Xbox 360 controller but at most each one of these ports connecting back to the original circuit board won't drive the price of the controller up too much farther. At a rough estimation, I'd guess the controller aesthetics of Project Shield will cost approximately $17 at launch. Adding up with the Tegra 4 estimation I made before, so far Project Shield will cost $64. Now unto what might or might not be the most important of the device: the 5 inch 720p display.
While it's hard to find just a 5 inch display on it's own, I found a device on Amazon that sells a car entertainment system that includes a 2.5 inch 720p LCD monitor. Including a vehicle accident video recording camera that supports 720p recordings, this product by NWW has some features that we won't really need as Project Shield probably won't support cameras. Taking off approximately $10 of the device's camera and keeping the SD port to subtract from the controller's total, I'd estimate $12 for the cost of this 2.5 inch display. Estimating the difference in TV costs between different sizes, I'm going to multiple our total cost to come to the conclusion that the screen adapter will cost approximately $28. Already taking the total of the SD port out from this device and adding it into our previous total, the device's price is $92 which is a fair price.
Estimating what gamers will believe the value market in with what Nvidia's marketing board may believe the product is worth, I'd say the release price for the product will be $169.99. Having a 45% profit margin, Nvidia's product will do well despite how many or few units are sold as long as the company doesn't make too many too quick. With the Ouya and GameStick being in direct competition to this Android handheld, how will Nvidia compete in a market where more and more console manufacturers? I've estimated the price and given a reasonable launch price of Project Shield. If you're in need of some extra funds for Project Shield , you should consider trading in some of your stuff to musicMagpie.
How much do you think Nvidia will release the handheld to the market for? Leave your comments below!