Sony PS4 production cost estimated at $381

IHS researchers took one of Sony's new PlayStation 4 consoles apart and estimated production cost. The report claims the PS4 has a total bill of materialsof $372 and a manufacturing cost of $9, resulting in a total manufacturing cost of $381. Given the PS4's retail pricing of $399 this means Sony is still selling the console at a loss.

If you account for other costs such as R&D, shipping, marketing, etc., that is. But the loss is far smaller than the firm took on previous consoles.Sony could actually make a few dollars on its latest PS4 console -- $18 to be exact. That's the conclusion of a teardown by IHS Inc., which estimates the cost of the bill of materials and manufacturing for the video game console at $381. It sells for $399.

The move marks a shift for Sony, which traditionally sells its consoles at a loss, making profit on the computer game titles it sells. Both the business model and the electronics changed with the PS4, which uses fewer expensive peripherals.

"The PlayStation 4 keeps a lid on costs by focusing all the additional expense on the processor and memory -- and reducing outlays for the optical drive, the hard disk drive and other subsystems," said Andrew Rassweiler, senior director, cost benchmarking services for IHS, speaking in a press release.

IHS estimates the optical drive in the PS4 costs $28, compared to $66 for the latest revision of the PlayStation 3, itself a cost-reduced model called the CECH-2001A. Sony trimmed another $10 by integrating a number of discrete and passive components, IHS said.

The PS4 also shaved five dollars in mechanical parts compared to the PS3. The hard drive in the PS4 is a 500 GByte model compared to just 120 GB for the PlayStation 3, but was still one dollar cheaper, thanks to efficiencies in hard drive manufacturing. 

The custom 28nm AMD integrated processor and its memory is the most expensive part in the PS4, costing $188, slightly more than 50 percent of the console's component costs. That's up from 29 percent for the most recent PlayStation 3, said IHS.

"This processor is a monster, with the surface area of the chip amounting to about 350 square millimeters -- three times larger than any other chip manufactured using equivalent-process technology that has been examined by IHS," said Jordan Selburn, senior principal analyst for consumer platforms at the market researcher.

The price increase in DRAM memory was even more dramatic than in the processor logic, IHS said. It estimates Sony spends $88 for the GDDR5 memory in the PS4 compared to just $9.80 for the DDR3 memory used in the PlayStation 3.

When all the costs are added up, Sony may still be making a marginal loss on the PS4, but it is far smaller than Sony took on previous consoles, IHS said.

The PS4 also shaved five dollars in mechanical parts compared to the PS3. The hard drive in the PS4 is a 500 GByte model compared to just 120 GB for the PlayStation 3, but was still one dollar cheaper, thanks to efficiencies in hard drive manufacturing.
According to IHS, the single most expensive component in the PS4 is the APU, it has an estimated cost of $100. Next is the DRAM at $88, the HDD at $37, and the optical drive at $28.