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The Surprisingly Affordable Price of PS4 - Good for Sony or Bad?

AKR|1644d ago |Blog Post|6|

. . . One of the, wait, scratch that. The MAIN thing that kept me from salivating over the PS4 too quickly, unlike 80%+ of the gaming community - was the ominous price tag.

When Sony unveiled their new console, boasting about it's superior next-generation tech ~ I immediately came to the conclusion that we'd be looking at another PS3 launch situation...great, powerful console - but yet it's a wallet killer.

I thought to myself: "It's human nature to want nice things. Sometimes, we want something so bad - we fantasize about it. When it comes down to physical items - you get all hyped up until you find out that you're actually going to have to pay real money to obtain that...and then you preform the head-down position of shame when you find out it's much too expensive for you to afford". That's why I was so unsure about the PS4. I was honestly expecting a system that would cost about $450+ - at the very least.

But then Sony decided to give me my cake and make me eat it too, with just 4 (no pun intended) little words. "Four-hundred-US-dollars& amp; quot;. My jaw dropped. "This is unreal! They're trolling, they gotta be trolling!" - This is what I thought to myself. Then I read the article again and sure enough "PS4 will be launching at $400".

Now I know for some of you; this broke the ice. Now you KNOW you'll be picking up a PS4 day-one (if you haven't already sped over to Amazon to secure your pre-order). All of this is great for Sony and the PS4. It gives the consumer more incentive to go for Sony's offering, versus the more expensive (by $100), DRM-stricken, 007-spy camera wannabe, XBOX One. It even gives the consumer more incentive to choose the PS4 over the Wii U. More games, better online, more powerful - future proof hardware - just $50 more.

But as great as this is for Sony; it's also bad. How?

If Nintendo is selling the Wii U at a lower price than it takes to manufacture the system and it's weaker than the PS4 - then how much should the PS4 REALLY cost? Is it really worth just $400, or is it a little bit more?

Sony can't afford to sell at a loss. Literally. Up until recent times, they've been in a financial crisis. They've found some stable ground now - but that doesn't mean it can't fall a part again. How much does it take for the PS4 to become a profitable sale? Maybe the system, plus a game or two? Wii U becomes profitable after a purchase of the system and one game - so maybe the same can be said for Sony, except maybe it would require two games.

It doesn't seem like Sony is awfully worried about this. They're doing this to make their product as attractive to the eye as possible (like any smart company would) - but if it means sacrificing yourself, then is it really worth it? Now, don't get me wrong, I'm not stating FOR A FACT that Sony is taking a loss by selling the PS4 at such a surprisingly low price. But, one can't help but think that it really does cost more to manufacture than what they're selling it for....

Well enough of my rambling. What's your take on the situation?
Let the world know by sounding off in the comments below:

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dedicatedtogamers1644d ago (Edited 1644d ago )

Most estimates place the PS4's total manufacturing costs (but not including stuff like shipping) at about $320. Plenty of wiggle room. The reason why Nintendo is selling the Wii-U at a loss is because they insisted on the tablet controller, which adds at least $150 to the overall price.

Sony made a smart choice to offer us "just a box that plays games" without required camera, required tablet, etc. And if I'm not mistaken, Sony is making a profit on every PS3 sold and they're either breaking even or making a very slight profit on Vita. They're poised to do very well financially.

NewMonday1644d ago

from component estimations it is speculated the PS4 is profitable by $25-$50, considering they are using 500GB HDD in the basic bundle suggested they are comfortable with the price point.

also if you give a reserved estimate to PS+ uptake of 1-3 you can add an average of $20 profit for every console just for the first year.

they look good for the $399 price and I predict a comfortable price reduction roadmap for the upcoming years, a $299 price for holliday 2015 looks very likely.

SilentNegotiator1644d ago

I knew going with an APU would make it inexpensive compared to Ps3 at launch. Plus, not forcing any accessories on us helped keep price down.

reaper241644d ago

They will earn money with PS+. Since we are hopefully getting free games and great deals for our money, this is a win win for everyone.

LightofDarkness1644d ago (Edited 1644d ago )

Most analysts agree that Sony are not selling this console at a loss, even at $399. The mobile APU designs are quite cheap, and while GDDR5 is somewhat expensive compared to DDR3 (you need more DIMMs) it isn't THAT much more expensive. I reckon they make a good 5-10% in profit on each one sold.

I don't know what's going inside the new Kinect, but it's not $120+ of technology, that we can be sure of. You're likely paying for the huge cloud (Azure) investments, R&D (triple OS design including Hyper-V and Windows 8 licenses for each machine) and licensing deals/partnerships with TV providers and publishers that MS have burdened themselves with.

It's frankly a poignant illustration of the current attitudes of both companies: MS using the shotgun approach (be everywhere, fight on all fronts) with heavy handed marketing and exclusivity deals, while Sony have remained committed to their leaner, more focused approach (trimming the fat and emphasizing simplicity with improved consumer relations).

KwietStorm1643d ago

It's the fact that the PS4 uses standard parts and architecture that keeps the cost down. PS3 was powerful, but considered to be over manufactured at the same time. If you customize something too much, the cost will go up. They found a way to again make a powerful system, but without the extra fluff. Along with the inflow of software support, new business models, and a more prominent PS+ role, I think this is exactly what Sony needed at this time. All they have to do is continue the wave to launch and beyond, and they'll move units that will more closely resemble the PS2 than the PS3.