The Sony PlayStation 4 Has Some Thin Margins

Posted Nov 20, 2013

The Sony PlayStation 3 was sold at a loss for the company, but Sony Corporation was expecting to make money back on individual games.  The Sony PlayStation 4 is using a similar strategy, but Sony is making a profit from each console sold, according to research firm IHS.  The cost to produce the PlayStation 4 is believed to cost around $381, which is $18 less than the sales price of $399.  This means that Sony is making a small profit margin on the sales of the PS 4.  Thin margins are rare for electronics with the exception of consoles.  Microsoft’s margins for the Xbox One console are also believed to be thin.

However, the Apple iPad Air tablet is believed to cost $274 to build, but sells for $499.  That is a solid margin right there.

Let’s compare these numbers to the PS 3 though.  IHS conducted a teardown analysis when the Ps 3 launched as well.  It is believed that the PS 3 costed around $805 to build the console and it sold for around $599.  The costs came down over time though. By the end of 2009, the PS3 was selling for around $299 and it was costing $336 to build.

?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,? stated Andrew Rassweiler, an analyst at IHS.

The biggest proportion of the cost of the internal components are the chips.  The console has a large microprocessor that is made by Advanced Micro Devices.  The chip costs around $100 to build.  The 16 individual memory chips costs $88.  That is over half of the cost, according to Rassweiler.

[Source: AllThingsD]