Sony (NYSE:SNE) and Microsoft (NASDAQ:MSFT) launched the PS4 and Xbox One, respectively, in late 2013. Sony subsequently shipped 106 million PS4s, according to Vgchartz, while Microsoft remained the underdog with 46 million Xbox One shipments.
Yet both companies struggled with slowing hardware sales in 2019, as their aging consoles matured and gamers postponed their purchases in anticipation for next-gen consoles. That's why Sony and Microsoft's gaming revenues fell 17% and 7% year-over-year, respectively, in their latest quarters.
That drop matters more to Sony, which generated 21% of its sales from its gaming unit, than Microsoft, which relied on gaming for just 8% of its sales. Nonetheless, both companies are investing heavily in their next-gen gaming consoles -- the Xbox Series X and the PS5 -- which are set to arrive during the holidays this year. Let's examine both devices to see which company has the upper hand.
What do we know about the PS5?
Sony hasn't unveiled the complete hardware specs for the PS5 yet. However, it confirmed that it will be powered by AMD (NASDAQ:AMD)'s third-generation 7nm Zen 2 CPU with eight cores. For memory, it's expected to use GDDR6 RAM -- which transfers data at about twice the rate of the GDDR5 memory used in the PS4 and Xbox One.
Its graphics will be powered by a custom Navi GPU from AMD, which will support 8K resolutions, refresh rates up to 120Hz, and ray-tracing technologies for real-time shadows. It will also support 3D audio.
The PS5 will also store data on an SSD (solid-state drive) instead of a traditional HDD (hard disk drive). SSDs, which store data on flash memory chips instead of platters, are faster, smaller, more power-efficient, and less prone to damage than HDDs -- but they're significantly pricier.
Gamers are downloading a growing number of digital games, but the PS5 will still include a disc drive that plays games and Blu-Ray discs. Sony also remains committed to virtual reality games and has confirmed that the current PSVR headset will work with the PS5. It will also reportedly offer backward compatibility with PS4 games, but it's unclear if games from older consoles will be supported.
Sony hasn't revealed the console's price yet, but its previous console launches suggest that it will either match or undercut the price of Microsoft's console. As for games, there are only two confirmed launch titles so far: the action RPG Godfall and an untitled Bluepoint Studios game. The console will also continue supporting its cloud gaming platform, PS Now.
What do we know about the Xbox Series X?
Microsoft revealed some more information about the Xbox Series X last month, but only highlighted a few hardware specs. Like the PS5, it will pair AMD's Zen 2 CPU with a custom Navi GPU.
Microsoft claims the new hardware will offer about four times the CPU performance of the original Xbox One and roughly twice the GPU processing power of the two-year-old Xbox One X. It will also reportedly use GDDR6 RAM and store its data on an SSD instead of an HDD. It will also support 8K resolutions and ray tracing.
Simply put, the Xbox Series X will sport similar hardware as the PS5, which isn't surprising since many cross-platform games will be launched for both consoles. However, Microsoft doesn't have plans to launch a new VR headset to compete against Sony's PSVR, and Xbox chief Phil Spencer recently told Stevivor that the Series X wouldn't be designed with VR games in mind.
Microsoft also noted that the "Series X" only refers to the first version of the console, which suggests that it will launch other variants branded with other "Series" labels -- similar to the Xbox One S and Xbox One X. It also indicates that Microsoft could launch a disc-free version of the new Xbox to succeed its disc-free Xbox One S. The console will also offer backward compatibility with Xbox One games, but it's unclear if it will be compatible with older consoles.
Microsoft hasn't announced a final price yet, and only a few launch games -- including Halo Infinite and Sehua's Saga: Hellblade II -- have been confirmed. The Series X will continue supporting Microsoft's unlimited download service Xbox Game Pass, and will likely support its new cloud gaming platform xCloud.
Sony still has the advantage
Sony has beaten Microsoft over the past three console generations, with the PS2, PS3, and PS4 all outselling the Xbox, Xbox 360, and Xbox One, respectively. Therefore, Sony will likely maintain its leadership position with the PS5 unless Microsoft drastically undercuts its price or secures more compelling launch titles.
Yet that doesn't necessarily mean that Microsoft's gaming business will falter. Microsoft's gaming business generated robust growth over the past six years even though it couldn't match Sony's reach -- and it will likely remain one of the company's core growth engines with the launch of the Xbox Series X.