Sony's (SNE) - Get SONY GROUP CORPORATION SPONSORED ADR Report plans to sell a version of the PlayStation 5 that lacks an optical drive should be a positive for AMD (AMD) - Get Advanced Micro Devices, Inc. Report and Western Digital (WDC) - Get Western Digital Corporation Report.
During a PS5 reveal event that was streamed on Thursday afternoon, Sony showed off (to very mixed reviews) the hardware design for its next-gen console. It also streamed trailer footage for 26 upcoming PS5 games. Ones that turned heads included role-playing games Spider-Man: Miles Morales and Horizon: Forbidden West, racing game Gran Turismo 7 and survival horror game Resident Evil 8: Village.
And notably, Sony disclosed that in addition to selling a standard PS5 that will rely on both a solid-state drive (SSD) and a Blu-ray drive for storage, it will also sell an SSD-only "Digital Edition" of the console. Both PS5 variants are due out by this holiday season.
The disclosure comes amid reports that Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report, whose Xbox Series X console is due out around the same time, is working on a cheaper Xbox that's codenamed Lockhart and also lacks an optical drive. However, whereas the PS5 Digital Edition will be just as powerful as the regular PS5, Microsoft is reportedly aiming for an "ideal target performance" for Lockhart of 60 frames per second (fps) at just a 1440p resolution, versus 60fps at a 4K resolution for the Series X.
Last year, Microsoft rolled out an optical drive-free version of its Xbox One S console that sells for a discount to the standard One S. However, the fact that the original Xbox One launched in late 2013 (and amassed a substantial installed base in the following years) has kept a lid on demand.
Sony hasn't yet disclosed pricing for either version of the PS5. However, with Bloomberg having reported in February that the console has a $450 manufacturing cost (presumably, that's for a version featuring a Blu-ray drive), the console isn't expected to be cheap. One recent rumor indicates that the standard PS5 will have a $499 launch price.
For that reason, selling a cheaper, SSD-only version of the console could meaningfully boost unit sales. That in turn would be a positive for AMD, which is the CPU/GPU supplier for both the PS5 and Series X.
Higher unit sales would also be a positive for hard drive/flash memory giant Western Digital, which has previously suggested it will be a major SSD supplier for next-gen consoles. Moreover, given that users of SSD-only consoles will often need more flash storage, they're more likely to buy consoles featuring higher-capacity drives.
And to some extent -- though standard digital game downloads are still an option for them -- users of optical drive-free consoles might be more willing to give game-download and cloud gaming services a spin.
Microsoft, which plans to take a gradual approach to rolling out its new xCloud game-streaming service, disclosed in April that it has racked up more than 10 million subscribers for its Xbox Game Pass game-download service, which supports both Xboxes and Windows PCs.
Electronic Arts (EA) - Get Electronic Arts Inc. Report disclosed last October that it has more than five million subs across its EA Access (PS4/Xbox One) and Origin Access (PC) game-download services. And last month, Sony reported having a relatively modest 2.2 million subs for its PlayStation Now game download and streaming service.
In a sense, Sony and (reportedly) Microsoft's plans to offer consoles lacking optical drives are a continuation of a long-term trend away from optical storage that began when Apple (AAPL) - Get Apple Inc. (AAPL) Report launched its first optical drive-free notebook (the original MacBook Air) in 2008. And while optical drive makers might not be pleased to see this trend reach the premium game-console market, some other console suppliers probably are.