PlayStation 4 was Too Expensive for NVIDIA

AMD (NYSE: AMD) is poised to make billions on the sale of Sony's (NYSE: SNE) upcoming game console, PlayStation 4.The chipmaker, which has a long heritage within the game industry, built graphics processors for Wii, Xbox 360 and GameCube. AMD is currently producing chips for Nintendo's (OTC: NTDOY) Wii U.Microsoft (NASDAQ: MSFT) has yet to say which chipmaker will supply the graphics processor for Xbox 720. Even without an Xbox deal, AMD will likely dominate the next generation of game consoles.Things could have gone in another direction, however. NVIDIA (NASDAQ: NVDA) -- AMD's chief competitor -- told GameSpot that it passed on a potential deal with Sony.Tony Tamasi, Senior VP of Content and Technology at NVIDIA, told GameSpot that the company was unhappy with the "opportunity cost" associated with PlayStation 4."I'm sure there was a negotiation that went on," said Tamasi. "And we came to the conclusion that we didn't want to do the business at the price those guys were willing to pay."Having been through the original Xbox and PS3, we understand the economics of [console development] and the tradeoffs."According to GameSpot, AMD is rumored to supply the chips for Xbox 720 instead of NVIDIA. Tamasi all but confirmed this when he told GameSpot that NVIDIA had to "look at [the] console business as an opportunity cost.""If we, say, did a console, what other piece of our business would we put on hold to chase after that?" he questioned.Even so, Microsoft did not use AMD chips to build its Surface RT and Surface Pro tablets. It turned to NVIDIA (NASDAQ: NVDA) and ARM Holdings (NASDAQ: ARMH) for the RT and used Intel (NASDAQ: INTC) processors for the Pro iteration.NVIDIA's reluctance to return to console development might be due to its own plans for a portable game machine. Currently known as Project SHIELD, the handheld device will play Android games natively and stream PC games locally from a user's desktop or laptop machine.Follow me @LouisBedigianBZ