Sony’s PlayStation 4 Costs $381 to Build — Only $18 Under Retail Price — in Teardown

AllThingsD: When PlayStation 3 was first released by electronics giant Sony in 2006, it was sold at a loss with the hope of making money back on individual games.
That’s pretty close to what Sony is doing again with the PS4, although it’s not as extreme. At least that’s the finding of the research firm IHS, which will later today release the findings of a teardown analysis of the PS4 and the combined cost of the components used to build it.

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allformats2762d ago

Not bad at all. So if you factor in PS Plus, which goes for $50 bucks -- let's say Sony actually profits $25 off of that... They make $25 for every console that sells with PS Plus, which is just about all.

They're going to make a lot of money on software this gen...

Ilovetheps52762d ago

You have to remember something though. The price of the hardware isn't the only cost of the console. There is marketing costs, R&D costs, distribution costs, and a lot more. So you can't base the cost per console purely on the price of the hardware in a console. Sony have said they are losing a little money on each PS4 sold, but I'm pretty sure they make that money back within a game or two being sold.

Blackdeath_6632762d ago

thank you good sir well said. you beat me to it.

kreate2762d ago

and the cut the retail market gets as well.

ShutUpDonny2762d ago (Edited 2762d ago )

And you can add 1$ for the workers who build it. I can't buy new electronic (or almost anything, really) without feeling bad about that. I would gladly pay 100$ more for a console if I knew the factory workers are respected and well paid.

SoulMikeY2762d ago

Shutupdonny, I can't even buy something if it wasn't made by underpaid, underprivileged, underaged hands. That's why I smile every time I look at my electronics.

Lol, jk

indysurfn2762d ago (Edited 2762d ago )

The real genius in the razor/razor blade business model is you get people to believe it. And they are happy to buy a 1 penny molded piece of plastic for $7 because they think your taking a loss off of it, and only making money on the blades. Marketing Genius! Laughing in your face all day long. Take a marketing class clowns the professor will explain this to you day one!

None of the manufacturers are losing money. Nintendo is just a little more honest with you people about it. But even they are not completely honest, at least they are not acting like they are losing money. Also watch the Sony earnings broadcast and see the cost with the R&D separate from the cost. It will come up, at least in the USA. This happened last gen with xbox360 and PS3. They did NOT lose money!

Do you really think it cost 80$ for a large scale order of gddr5 memory? This company has NO access to Sony's or Microsofts mass order contract for parts. They don't know how much it is costing them for parts! Especially the ones they manufacture themselves. This company is most likely basing on the median cost that smaller companies pay. They have business relationships, or are negotiating for one, or jockeying for one. This is a brown nosing article. Every company like iSuppli does this every gen, for cell phones to laptops, to consoles.

AliTheSnake12762d ago

How can they make money with the game or two sold. Aren't game developers supposed to get payed too ?
They will make money from PSN plus.

Ilovetheps52762d ago (Edited 2762d ago )

Ali, here is a chart that I found a while back of how much money goes to who:

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kneon2762d ago

The price is almost certainly lower than that. These guys have no idea what sort of bulk parts discounts Sony are getting. When you commit to ordering millions of something in a year you can usually get a good deal ;)

dcbronco2762d ago (Edited 2762d ago )

You get a good deal but these estimates are based on those types of deals. What other companies paid for similar parts or similar work. There are better offers sometimes, but they are usually close. iSuppli is very good at tear downs. I would bet their estimate is in the same range as the others that have been made.

kneon2762d ago

While they are likely pretty close on the commodity components they are just guessing when it comes to the custom components.

Especially when it come to the main components like the APU. They have no idea what the current yields are and that plays a huge role in the cost of such components. They also don't have a clue as to how much margin AMD were willing to give up to get this deal.

MazzingerZ2762d ago

This info doesn't come from SONY ...why to care?

DontH8DPlayaH8DConsl2762d ago

$18,000,000 in 24 hours ain't bad!

allformats2762d ago

No, you haven't even counted shipping and handling, plus marketing.

DontH8DPlayaH8DConsl2762d ago

Never said that was their profit...calm the hell down! Plus marketing fluctuates and retailers aren't selling them for their health sure they make something. How do you even know if Sony pays shipping & handling or if retailers pay it and pass the cost on to the consumer!

buffig2762d ago

to be fair, he seemed quite calm

MasterCornholio2762d ago

I think he meant revenue but still retailers are selling the consoles at a profit so Sony isn't selling the console to them for 399$.

Nexus 7 2013

seanpitt232762d ago

Even with all them consoles being sold they are probably at a loss they will start making money when all of the million + ps4 users starts to buy games and ps+ after the free trial.

+ Show (1) more replyLast reply 2762d ago
Concertoine2762d ago

I guess the wii u is the ONLY console selling for a loss this gen?! Since the xbone weve heard is also profitable.
Thats crazy, because the wii was the only one selling for a profit for years last gen!

Malice-Flare2762d ago

heh, @$500 XB1 better be profitable...

No FanS Land2762d ago

The PS4 is also selling at a loss. Sony is paying about 381 $ for the physical console, then you have to pay shipping cost , executives (Yoshida, House, Tretton etc) R&D and engineering. and mostly the console is sold maybe 350 to retailers, so they profit from the console. I say 2 first party games and sony is in profitability.

Einhert2762d ago

And people disagreed with me when I said console manufacturers make an initial loss for long term gain.

How uninformed they must look.

TIER1xWOLFPACKx2762d ago

If you convert what it's costs to make in $ to £ it costs £237 to make so in theory for every ps4 sold in UK when released they make a profit of £113 off every sold ps4 in the uk

sweendog2762d ago

The government gets that,our import taxes are huge

Idba2762d ago

In norway the import tax is even more huge!

a normal game costs 100$ and the PS4 here cost 575$ but since our currency is shit the pruice went up to 640$

solidboss072762d ago (Edited 2762d ago )

Maybe we should cost the PS4 manufacture in 'Yen', rather than Dollars to work out the true profits per unit - or lack of.
I am sure that Sony know what they are doing now, after what they have been through? And they are good at revising their hardware to increase profitability.

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