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Xbox One costs $471 to make - Report

IHS teardown suggests that Microsoft, like Sony, is roughly breaking even on its new hardware

The Xbox One costs gamers $499 to buy, and it costs Microsoft nearly that much to make. That's according to AllThingsD, which was given an early look at a teardown report of the system from research firm IHS.

All told, the firm estimates that each Xbox One costs Microsoft $471 in parts and manufacturing, compared to the $381 it pegged as Sony's PS4 costs. But where Sony's expenditures mainly went to the CPU and memory, Microsoft's top-dollar components were the CPU and Kinect camera. The AMD microprocessor at the heart of the Xbox One was estimated to be about $110 with "at least" $75 devoted to the Kinect motion-sensing camera. Microsoft also opted for older, less costly memory than Sony did, so the Xbox One chips cost about $60, compared to the $88 Sony is believed to spend on each PS4's memory.

While it makes it difficult for Microsoft to turn a profit on the hardware after shipping and retailers take their cut, that cost of materials is still a significant improvement over the last generation. Shortly after the Xbox 360 launched, an iSuppli teardown put Microsoft's cost at $525 for the premium model of the hardware, which retailed for $399.

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Brendan Sinclair avatar
Brendan Sinclair: Brendan joined in 2012. Based in Toronto, Ontario, he was previously senior news editor at GameSpot.
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