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.
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I seriously doubt it's that much.
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IHS are extremely good at this kind of thing. They striped down the console, and they run through the costs of each chip, from memory, APU, sound, usb, etc, etc. They then estimate how much it would of cost Sony to produce each console given the fact that they would of brought these parts in bulk and at a much lower cost than actually buying them off the shelf.
They did the same with the PS3 and as far as I remember reading they were only off by $35 (remember reading this from a Sony executive years ago).
Sony were selling the PS3 at a massive loss because the console cost so much for them to make. The Cell CPU was the main culprit, they actually built their own CPU for the machine in conjunction with Toshiba and IBM (if I remember correctly). Toshiba wanted out and Sony had to buy them out of the deal which cost even more money. On paper the CELL was a good idea and had a lot of potential but it was mismanaged from the start.
Did you know that Sony has such high hopes for the CELL CPU that they were not even going to put in a dedicated GPU and just have all the games run off the CELL they believed in it so much. But developers completely refused to use it and they were all about abandon the machine and go over to the Wii and Xbox which were MUCH easier to make games for.
This is what led to them throwing in a basically a 7800 Nvidia GPU (codenamed RSX) but this also led to even more problems. As the CELL has 256MB RAM available to it, but they added a GPU that also had another 256MB RAM. They had two separate memory pools that could not talk to each other or combine in anyway which caused massive bottlenecks for third party devs trying to get their games on the system from the much easier 360 which had a unified 512MB memory pool and (I think) 4MB of XDR memory on the CPU die it self.
Sony knows now that the PS3 was a massive mistake in terms of a manufacturing stand point. It was still a success though, and is currently a head of the 360 in terms of sales by a nice 1 million units (factor in all the 360 RRoD and that number is even larger the YLoD was nowhere near as big).
Before Sony had to sell around three games with each system sold on the PS3 to even start making a profit. Now with the PS4 they sell the console and ONE game and they are in the green. Something I think they have learnt from Nintendo.
Microsoft however, just seem to be doing the complete opposite this time and are charging you £100 more for a (on paper) weaker console, with a stupid camera that I can dance around in front of or speak too. Either way the mindless dumb idiots will still rush out to buy it. It will be funny when Microsoft flip that switch and do another 180 (to come full 360

EDIT:
WOW didn't know I wrote that much LOL

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I'm slightly disappointed Sony isn't courageous enough to sell at a greater loss in order to boost the hardware a little further in the PS4.
All things considered, this is probably a wise strategy, as PC, tablet and smart-phone gaming may eat into console sales this generation. Even so, with numerous developers struggling to provide a good gaming experience at 1080p on either console, it doesn't exactly excite me.
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I doubt it cost that much. I'm pretty sure Sony got discounts from vendors for buying all those parts in bulk.
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I don't think so.