The cheaper chip retains graphic capabilities but cuts out data processing capabilities, instead relying on emulation software run through the PS3’s Cell chip to handle the PS2 data processing environment.

The cheaper chip is being used in PS3’s that are shipping in Europe, Australasia, the Middle East and the Africas, and has already resulted in an outcry from users in those regions who feel they are receiving a PS3 that isn’t as good as that sold in the US or Japan, although future PS3’s for those regions are expected to receive the new ‘lesser’ chip soon, too.

The consensus of some in the industry is that despite Sony having criticized Microsoft for relying on Xbox software emulation with the Xbox 360, as Sony had planned for near 100% compatibility by promising to include the PS2 chipset in each PS3, Sony have since reported 1000 PS2 games (or around 40% of the European PS2 software library) will be compatible through the new software emulation, that a range of ‘big name’ titles will be compatible and that further compatibility with older PS2 games would be introduced with future PS3 firmware updates.

Sony has taken the move to software emulation because it saves them a reported US $27 per PS3, lowering the loss made on each PS3 sold, which is said to currently be costing Sony in the vicinity of US $200 per unit.

MarketWatch quoted the Nikkei Daily report and said that in January, Sony forecast losses at its game unit would total 200 billion yen ($1.7 billion) in the fiscal year ending March 31, 2007, but that the PS3 would be actually turning a profit on each unit sold between September 2007 and March 2008.

Unfortunately there was no word on if this was because component costs are projected to have decreased by that time or if Sony expects to consolidate the existing motherboard into a configuration with fewer chips while retaining platform stability as happened with the PS2 over its lifespan, with reports that when Sony slimmed the original PS2 down to its much smaller refresh, some older PS2 games didn’t work.

This didn’t dampen enthusiasm for the PS2 however, with the PS2 still remaining the world’s games console champion 7 years after its launch even in the face of sustained competition from the Xbox 360, and more recently the Nintendo Wii and of course the PS3, which still remains officially unavailable in half the world, although this will be rectified on March 23, with the official Singaporean launch happening earlier this week.
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