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PS4 costs $381 to build; Sony possibly taking loss on each system sold

PlayStation 4 Screenshot - PS4 console

A new tech teardown of the PlayStation 4, by research firm IHS, has found that Sony's new console costs about $381 to build -- just $18 less than the $399 it is being sold for.

If accurate, it would be a slight improvement for the company which sold the the PlayStation 3 at a loss when it first launched in 2006. Sony's hopes were that it would make its money back on the sale of individual games.

IHS' findings include the price of components used to build the PS4 along with the cost to assemble them. Much of the cost is attributed to the PS4s chips which make up for nearly half the total cost. The Advanced Micro Devices (AMD chip) costs about $100, while the 16 individual memory chips inside the PS4 add up to another $88.

Other costs include the hard drive from Seagate, wireless chips from Marvell and Skyworks and an optical drive, along with the controller which contains Bluetooth chips from Qualcomm, an audio chip from Wolfson Microelectronics, and a motion sensor chip from Bosch.

At best, IHS figures Sony is making little -- if any -- profit on every PS4 console sold. Sony might even be taking another loss on the system. "If your cost is within $10 to $20 of the retail prices, there’s very little chance you’re making a profit on the console,” said IHS analyst Andrew Rassweiler, who oversaw the teardown.

Regardless, it's a better situation then what Sony had with the PS3 in 2006. Back then, IHS conducted a similar teardown of the PS3 and found that it cost about $805 to build; the PS3 sold for $599. Over time, the cost to build PS3s came down, but Sony responded by cutting its retail price in order to encourage more sales. By late 2009, the PS3 cost $336 to build, but it was also being sold for $299 -- more loss.

“If Sony could build the PS4 for a lower cost it would do so, but if history is any indicator, it would also lower its retail price,” Rassweiler added. "It looks like once again, when it comes to profits, it’s all about the game titles."

[AllThingsD]

Matt-liebl-profile
Matt Liebl You can follow Senior News Editor Matt Liebl on Twitter @Matt_GZ. He likes games, sports, musicals, and his adorable dog, Wrigley. And his wife.
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