PlayStation 4 Costs Sony $381 To Build

[roseofbattle]

PlayStation 4 Costs Sony $381 To Build

A teardown reveals Sony's PlayStation 4 costs $18 less than retail price.

Pricing a console means balancing profit for the company and how much consumers are willing to spend. It's no surprise that giants like Sony look to make a profit on games and controllers as opposed to the sale of the console itself. Sony will make $18 with the sale of each PS4 system, an analysis research firm IHS revealed. With a $399 retail price, the cost of the parts of the PS4 and the cost of the labor required to assemble those parts totals $381.

It's still an improvement over the cost to build the PS3. Sony sold the PS3 at launch for $599, but it cost about $805 to build. Even later on when the system sold for $299, it cost $336 to build.

IHS noted how much each part cost in one system. The Advanced Micro Devices microprocesser costs $100 to build, and the 16 individual memory chips add up to be $88. IHS noted that the microprocesser chip is about three times as big as the next-biggest chip the firm had seen, and chips with a larger surface area have a higher probability of manufacturing defects. IHS estimates about one-third of the chips are defective and aren't used, which increases the cost. The other parts in the PS4 are much cheaper. The Seagate hard drive is $37, and wireless chips from Marvell and Skyworks plus an optical drive cost $28.

The DualShock 4 is an area where Sony can make a bit more of a profit. The controller costs $18 to build, and its retail price is $60. The controller contains Qualcomm Bluetooth chips, a Wolfson Microelectronics audio chip, and a Bosch motion sensor chip.

Sony's business practice in this regard hasn't changed much, but the cost to make a PS4 at launch is greatly less than the at-launch price to build the PS3. Even so, Sony will be looking to push games sales to make a profit.

Source: AllThingsD [http://allthingsd.com/20131119/teardown-shows-sonys-playstation-4-costs-381-to-build/?mod=tweet]


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[FogHornG36]

ah, so when they lower the price for the first time, they will no longer be making any money.

 

[silverbullet1989]

going on how out dated the hardware already is in this "next gen" of consoles, i'd have been more surprised had they been selling the damn things at a loss this time round.

 

[M920CAIN]

Yeah, I don't believe it. They're paying small salaries to the factory workers, surely they're making about 299 dollars profit per console. Those executives they've got need huge loads of money to keep their life styles going.

 

[XMark]

Not really a big surprise. Consoles themselves aren't usually very profitable, and sometimes are sold at a loss. They're a long-term investment to get future revenue from the games.

 

[CrazyCapnMorgan]

So, let's do some maths, shall we people?

A million units sold in North America at an $18 profit in 24 hours - $18 million.

Sony's projected 3 million unit sales worldwide before the end of 2013 - $54 million.

A decision to make some worthwhile games readily available at launch? - Priceless.

Granted, I got Killzone: Shadow Fall because me and my brother like some Killzone, but I'm basically waiting until my birthday until the releases of inFamous: Second Son and Final Fantasy 14: A Realm Reborn for PS4.

 

[MCerberus]

So, let's do some maths, shall we people?

A million units sold in North America at an $18 profit in 24 hours - $18 million.

Sony's projected 3 million unit sales worldwide before the end of 2013 - $54 million.

A decision to make some worthwhile games readily available at launch? - Priceless.

Granted, I got Killzone: Shadow Fall because me and my brother like some Killzone, but I'm basically waiting until my birthday until the releases of inFamous: Second Son and Final Fantasy 14: A Realm Reborn for PS4.

Actually it's pretty far in the red. First you need to take out the retailer cut. Then you must assign indirect and fixed costs to the unit.

 

[Adam Jensen_v1legacy]

going on how out dated the hardware already is in this "next gen" of consoles, i'd have been more surprised had they been selling the damn things at a loss this time round.

People keep saying that but it isn't true. There's more to the console hardware than which series of GPU it uses. It isn't outdated. The way the unified memory architecture within the PS4 works is quite novel and won't be available to PC gamers until 2014.

Not really a big surprise. Consoles themselves aren't usually very profitable, and sometimes are sold at a loss. They're a long-term investment to get future revenue from the games.

Which make me wonder why don't they just embrace the PC. They don't have to do anything except make video games for it. And maybe they will do that after this generation of consoles is over. Maybe the Steam Machine and Steam OS will have something to do with it. It makes the uncertain future certainly interesting.

 

[CrazyCapnMorgan]

So, let's do some maths, shall we people?

A million units sold in North America at an $18 profit in 24 hours - $18 million.

Sony's projected 3 million unit sales worldwide before the end of 2013 - $54 million.

A decision to make some worthwhile games readily available at launch? - Priceless.

Granted, I got Killzone: Shadow Fall because me and my brother like some Killzone, but I'm basically waiting until my birthday until the releases of inFamous: Second Son and Final Fantasy 14: A Realm Reborn for PS4.

Actually it's pretty far in the red. First you need to take out the retailer cut. Then you must assign indirect and fixed costs to the unit.

The joke was made to imply that making good games for the console would've helped in the very situation you just described. Thank you, though, for that additional input.

 

[Covarr]

Sony will make $18 with the sale of each PS4 system, an analysis research firm IHS revealed.

No they won't. There's labor costs for assembly, factories and storage, the retailer's cut... They're not even breaking even per unit sold. It's worse if you start to figure in advertising and R&D costs that they pour into the PS4.

Still, the amount they're losing per system sold is low enough they can make it back fairly quickly. A game and a PS+ subscription on average per unit should be more than enough to make up the difference.

P.S. Thanks

 

[JoJo]

Wait a minute, this article doesn't make sense. It assumes that retail price - manufacturing costs = profit for Sony. That would be true... if the stores selling the PS4 didn't take a cut of the profit, which is about as likely as pigs flying. Factor in the cost of shipping and advertising too, and it's more likely that the profit for Sony is minimal at best, if not negative. Of course, the extras and game sales are where the real cash is.

Edit: Rats, ninja'd by Covarr whilst I was writing this!

 

[silverbullet1989]

So, let's do some maths, shall we people?

A million units sold in North America at an $18 profit in 24 hours - $18 million.

Sony's projected 3 million unit sales worldwide before the end of 2013 - $54 million.

A decision to make some worthwhile games readily available at launch? - Priceless.

Granted, I got Killzone: Shadow Fall because me and my brother like some Killzone, but I'm basically waiting until my birthday until the releases of inFamous: Second Son and Final Fantasy 14: A Realm Reborn for PS4.

Actually it's pretty far in the red. First you need to take out the retailer cut. Then you must assign indirect and fixed costs to the unit.

The joke was made to imply that making good games for the console would've helped in the very situation you just described. Thank you, though, for that additional input.

going on how out dated the hardware already is in this "next gen" of consoles, i'd have been more surprised had they been selling the damn things at a loss this time round.

People keep saying that but it isn't true. There's more to the console hardware than which series of GPU it uses. It isn't outdated. The way the unified memory architecture within the PS4 works is quite novel and won't be available to PC gamers until 2014.

It maybe clever the way they do things, but when they cant even run games at 1080 in 2013 then what in the hell was the point in releasing a new gen of consoles to last another 7-10 years?

 

[Zer0Saber]

Now I'm waiting for the xbox one cost to build. with a little less performance hardware than the PS4, but inclusion of the kinect I wonder how justifiable their price will be.

 

[RhombusHatesYou]

going on how out dated the hardware already is in this "next gen" of consoles, i'd have been more surprised had they been selling the damn things at a loss this time round.

People keep saying that but it isn't true. There's more to the console hardware than which series of GPU it uses. It isn't outdated. The way the unified memory architecture within the PS4 works is quite novel and won't be available to PC gamers until 2014.

Exactly. The Jaguar APUs aren't outdated, they're AMD's current low-power laptop APU. They are comparatively underpowered but maybe metaphorically taping two of them together will help. The next-gen consoles should see a minor jump in performance if devs learn to effectively code for that many cores (most devs are shit at that sort of thing at the moment).

 

[taciturnCandid]

People keep saying that but it isn't true. There's more to the console hardware than which series of GPU it uses. It isn't outdated. The way the unified memory architecture within the PS4 works is quite novel and won't be available to PC gamers until 2014.

I don't think desktops will ever use hUMA. Maybe laptops, but not desktops. It kinda kills the ability to choose your processor and isn't really an advancement for anything but mobile devices or devices that you can't change the hardware.

 

[Toadfish1]

So, let's do some maths, shall we people?

A million units sold in North America at an $18 profit in 24 hours - $18 million.

Sony's projected 3 million unit sales worldwide before the end of 2013 - $54 million.

A decision to make some worthwhile games readily available at launch? - Priceless.

Granted, I got Killzone: Shadow Fall because me and my brother like some Killzone, but I'm basically waiting until my birthday until the releases of inFamous: Second Son and Final Fantasy 14: A Realm Reborn for PS4.

I'd advise checking out the indie titles before that. There's some amazing stuff coming from independent artists lined up for the machine before the end of the year.

So, let's do some maths, shall we people?

A million units sold in North America at an $18 profit in 24 hours - $18 million.

Sony's projected 3 million unit sales worldwide before the end of 2013 - $54 million.

A decision to make some worthwhile games readily available at launch? - Priceless.

Granted, I got Killzone: Shadow Fall because me and my brother like some Killzone, but I'm basically waiting until my birthday until the releases of inFamous: Second Son and Final Fantasy 14: A Realm Reborn for PS4.

Actually it's pretty far in the red. First you need to take out the retailer cut. Then you must assign indirect and fixed costs to the unit.

The joke was made to imply that making good games for the console would've helped in the very situation you just described. Thank you, though, for that additional input.

going on how out dated the hardware already is in this "next gen" of consoles, i'd have been more surprised had they been selling the damn things at a loss this time round.

People keep saying that but it isn't true. There's more to the console hardware than which series of GPU it uses. It isn't outdated. The way the unified memory architecture within the PS4 works is quite novel and won't be available to PC gamers until 2014.

It maybe clever the way they do things, but when they cant even run games at 1080 in 2013 then what in the hell was the point in releasing a new gen of consoles to last another 7-10 years?

....who told you they can't run games at 1080p? Thats the Xbox ONE - the Ps4 is the one that can do native 1080p for COD: Ghosts, a game whose developers do not give even the slightest shit about optimization.

 

[omega 616]

When they cant even run games at 1080 in 2013 then what in the hell was the point in releasing a new gen of consoles to last another 7-10 years?

I assume it was also people like you saying that "current gen consoles are holding back gaming 'cos they are running on 8 year old hardware" ... they simply can't win.

Yeah they could start releasing top of the line gaming pc's packaged as consoles but people started shouting at Sony at the cost of the PS3.

Simple fact is most people wont even notice the difference between the resolutions, even in a side by side, which most people will never do in there homes.

 

[mjc0961]

The DualShock 4 is an area where Sony can make a bit more of a profit. The controller costs $18 to build, and its retail price is $60.
Read more at http://www.escapistmagazine.com/news/view/129793-PlayStation-4-Costs-Sony-381-To-Build#YRZpkO1Z44i40EhE.99

You know, I almost bought a second PS4 controller today. Glad I didn't. That's highway robbery right there. I'll wait for a sale.

You could at last go to $50 or even $45, Sony. That's still plenty of profit without screwing your customers over.

 

[vxicepickxv]

Sony is losing money on these, probably. I say probably because of a few factors. First, no console is worth a profit margin of less than ten dollars. Second, labor is still a cost. Of course, Sony is buying these chips in bulk, and isn't paying full retail for any part at all. It might actually be close to profit neutral for Sony.

 

[Psychobabble]

Not really a big surprise. Consoles themselves aren't usually very profitable, and sometimes are sold at a loss. They're a long-term investment to get future revenue from the games.

Yep completely true. Which sadly I feel is one of the reasons AAA game spending and DLC double dipping has become so insanely out of control. It also goes a long way in explaining why there have been so many AAA multimillion dollar selling "failures" these last few years. With the release of the PS4 and the Xbone, and in the wake of companies trying to chase GTA V money without understanding just why that game made so many sales, I feel it's safe to say we can all expect our games to get a bit worse this generation, as these not very profitable selling console companies manipulate AAA studios to try to increase their profit margins.