Sony Is Probably Losing Money On Every PS4, But Not Much
IHS revealed its PS4 teardown today, and the firm says each PlayStation 4 costs Sony about $381 to build.
From the IHS newswire:
…Sony has produced a design whose component and manufacturing costs are starting out lower than its price tag—paving the way for the company to quickly attain profitability on hardware sales, according to preliminary results from the Teardown Analysis Service at IHS Inc. (NYSE: IHS). Furthermore, the PlayStation 4 delivers major upgrades where it counts, with a processor and memory subsystem that pushes the envelope in terms of performance and product design.
The bill of materials (BOM) for the PlayStation 4 amounts to $372. When the manufacturing expense is added in, the cost increases to $381. This comes in $18 lower than the $399 retail price of the console.
That $18 gap is likely swallowed by shipping and other costs, but the fact that Sony is already sitting at the break-even point during launch is a far cry from the PS3. With an starting retail price of $599 against component costs of over $800, PS3 profitability was very much at the mercy of game sales. Ultimately, the PS4 is probably being sold at a loss, but a loss that is immediately covered by just one sale (be it a game, a controller, or a PS Plus sub).
The PS4 controller has quite a substantial margin, on the other hand. IHS says the DualShock 4 costs about $18, against a $59.99 MSRP in the US. Even if the controller ultimately costs Sony $30 (shipping, etc.), that’s still $30 in profit on a $60 piece of hardware.
It was also revealed that each AMD chip bought by Sony for the PS4 costs about $100, although it’s unknown how much of that is profit for AMD.