Sony nearly breaking even on PS4 hardware - Report
IHS teardown of new console puts Sony's cost of goods and assembly at $381 per system
The gaming industry is officially through the looking glass. Nintendo, a long-time advocate of turning a profit on its hardware, is selling every Wii U at a loss, while Sony is just about breaking even on the PlayStation 4.
According to an AllThingsD report, market research firm IHS has conducted a teardown of the PS4 and estimated Sony's cost of parts plus assembly on the hardware to be $381, while the console itself retails for $399. That's a far cry from the PS3's launch economics, when IHS estimated Sony manufacturing cost for each machine at $805, far exceeding even the system's already steep $599 retail price.
Most of Sony's PS4 costs are accounted for by the system's CPU and memory. The AMD chip at the heart of the system is estimated to run Sony about $100, while another $88 was attributed to 16 separate memory chips in the system. The Dual Shock 4 controller was pegged at an $18 build cost.
"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," IHS analyst Andrew Rassweiler told the site.
The IHS estimate falls in line with comments Sony Computer Entertainment Worldwide Studios head Shuhei Yoshida made to GamesIndustry International prior to the PS4 launch last week.
"In a sense, we're doing great because we're not losing billions with the launch of PS4," Yoshida said. "In fact, we're pretty much breakeven in this launch year of PS4..."
As stated in the article, Nintendo claims to be taking losses per Wii U sold yet IHS stated a teardown cost of just $241.87.
Sony just need some games and itll be looking good from the off. The production cost savings over time might be less this time round, but Im sure it can come down a little.
Edited 2 times. Last edit by Sandy Lobban on 20th November 2013 2:50pm
Nintendo were able to do this with the GC because they came a year later with (if I remember rightly) the first console with a SoC enabling it to launch slightly more powerful than the PS2* at a lower price for a profit.
This decision on hardware seems to be very short term as it means that the average off the shelf PC will have caught up much sooner.
And as everyone's been saying, the distribution chain as well as R&D needs to be factored into this.
*: these events occurred over ten years ago and my memory of even what I had for breakfast is hazy, and I'm still halfway through it!
Edited 1 times. Last edit by Keldon Alleyne on 20th November 2013 10:58am
Even if these consoles were twice as powerful, I wouldn't immediately assume that the graphical bar would be an awful lot higher at launch, simply because all the same shader and lighting effects would be used anyway.
My idea of 'next gen' graphics, isn't the same game with higher resolutions and higher shader quality, it is an approach that is very different to what we saw previously. These devices certainly offer potential for new approaches in graphics rendering.
Edited 1 times. Last edit by Adam Campbell on 20th November 2013 1:59pm
Edited 1 times. Last edit by Andrew Goodchild on 21st November 2013 6:39am
It's all one huge money engine, churning away...