Sony’s PlayStation 4 costs $381 to build?

Plainview

Plainview

I am a sinner.
Sep 11, 2013
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AllThingsD did a cost comparison of a PlayStation 4 tear down. It's going to be a while before Sony is making a profit on the sale of each console.

AllThingsD got an early look at the analysis, in which the firm estimates the cost of those parts, plus what it costs to assemble them, at $381. That is only $18 shy of the PS4′s $399 retail price, leaving Sony little profit margin on the sale of the device itself.

Such thin gross margins on a consumer electronics product are rare. Apple’s iPad Air, for example, sells for a minimum of $499 at retail, yet costs up to $274 to build, leaving a considerable margin, according to previous IHS reports.

However, it’s a better picture now for Sony than it was in 2006, when its predecessor game console, the PS3, was first released. Back then, IHS conducted a similar teardown analysis of the PS3 and determined that it about $805 to build a console that sold for $599. Over time, of course, the costs came down, but when they did, Sony cut its retail price accordingly in order to encourage more sales. By late 2009, the PS3 was selling for $299, even though it cost $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,” says Andrew Rassweiler, an analyst with IHS in Los Angeles who oversaw the teardown.​
 
They said they hope everyone that buys one buys PSN+ as well if they don't already have it to up the profit.
 
Rare ? Sure, but only cause it is making profit day one.

When you consider how many it is likely to sell through the yars and that the margin of profit will only get bigger, it is all good news for sony.
 
Looks like they are going to need every penny...I'm assuming games fall under 'Sony Entertainment' as well? Or is this just referring to movies?

Report: Sony Entertainment Looking at $100 Million in Cuts

Sony Entertainment, under pressure from a key investor to boost profitability, is reviewing ways it can find “further efficiencies,” a process that the New York Times reported on Monday will result in an estimated $100 million or more in overhead cuts and potential layoffs.

The Times said that Sony Entertainment CEO Michael Lynton was likely to announce that Bain & Co. would help it identify the cuts at an investor meeting scheduled for Thursday on the studio lot.

Charles Sipkins, a spokesman for Sony, said in a statement: “As part of a nearly four-year process of increasing financial discipline, Sony Pictures is conducting a review of its business to identify further efficiencies. Our object is, and always has been, to operate an efficient studio that is uniquely positioned to capitalize on further growth opportunities.” He declined further comment.

Sony’s studio operations came under further scrutiny in May, when Third Point’s Daniel Loeb proposed the idea of spinning off those assets as a way of boosting transparency and accountability, criticizing the studio for lagging behind competitors in profitability. He struck a more conciliatory tone after the spinoff offer was rejected but told Variety that he still expected “more disclosure and a more detailed plan for how they will improve profitability in their entertainment division, including specific profitability targets.” Third Point has acquired about 7% of Sony.

A spokeswoman for Loeb and Third Point said they had no comment.
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Jaydee said:
At least it's making some profit.
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They're not making a profit. It's a loss per console right now. It's a MUCH better scenario for them than the PlayStation 3 was. They'll be able to turn a profit on each console FAR faster. They set themselves up well.
 
Yeah sure. For the record, I don't want Sony to fail, ever.

PV, any idea how much it cost to run PSN? I wonder how much they stand to gain now that they'll be charging for it. I'm surprised they didn't charge for it sooner, considering this article.
 
Viktor said:
Rollins right on schedule with the negative Sony news.
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See, I wouldn't have known this thread was sullied if you hadn't said that.
Make life nicer for yourself - add them to your Ignore list, remove them from your reality.
My list is getting pretty impressive. I come to a clean forum, void of the venoumous hate from the other side of the fence. They hate us, because our machine is more powerful, we'll have more games, and our subscription is a better deal.
Just accept that they hate us, "cause that's how Xbox people are."
:D
 
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Now we know why Music Unlimited is as for right now the only music choice for playstation 4 users.
 
Plainview said:
They're not making a profit. It's a loss per console right now. It's a MUCH better scenario for them than the PlayStation 3 was. They'll be able to turn a profit on each console FAR faster. They set themselves up well.
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How is selling a console at $399 and it cost $381 to make not profiting? That means they made $18millilon in 24hrs from the release of the PS4.
 
apollooff320 said:
How is selling a console at $399 and it cost $381 to make not profiting? That means they made $18millilon in 24hrs from the release of the PS4.
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Those are just parts. It costs a lot more to make a console than just throw parts together.
 
apollooff320 said:
How is selling a console at $399 and it cost $381 to make not profiting? That means they made $18millilon in 24hrs from the release of the PS4.
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Because you have to factor in other things such as shipping, packaging, labeling, printing, etc. And I won't even touch on the millions spent on advertising and the multimillions spent on R&D because those don't come along with the console itself.
 
Plainview said:
Because you have to factor in other things such as shipping, packaging, labeling, printing, etc. And I won't even touch on the millions spent on advertising and the multimillions spent on R&D because those don't come along with the console itself.
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I'm sure if I just bought the required parts and put it together it would play PS4 games.
 
Plainview said:
Because you have to factor in other things such as shipping, packaging, labeling, printing, etc. And I won't even touch on the millions spent on advertising and the multimillions spent on R&D because those don't come along with the console itself.
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Yeah thought about that after making post.
 
Didn't Sony say sometime during the summer that they were going to lose about $60 per console? or something like that. Given all the other costs associated with the console the estimated unit cost is at least believable if Sony was indeed losing $60 per unit.
 
All I know is that Sony said they don't make a profit on each sale,
SevenDead1ySinz said:
Didn't Sony say sometime during the summer that they were going to lose about $60 per console? or something like that. Given all the other costs associated with the console the estimated unit cost is at least believable if Sony was indeed losing $60 per unit.
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They said it is at a loss until someone picks up an accessory or PS Plus, so close enough.
 
It's a far better situation than they were in last gen.

Kind of sucks that the "big loss leader" formula didn't really work for MS or Sony... sucks for consumers at least.
 
VaLLiancE said:
http://www.cdrinfo.com/Sections/News/Details.aspx?NewsId=38639
http://blogs.wsj.com/digits/2013/11/17/sony-needs-long-haul-boost-from-playstation-4/
http://www.thesixthaxis.com/2013/11/17/over-one-million-people-now-own-a-ps4/
http://blogs.wsj.com/digits/2013/11/15/sony-may-gross-about-100-per-console-teardown-shows/

why hell no cause it voids this thread?
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Because there's no chance in hell the PS4 is making $20 per console for Sony, if AllThingsD is correct, let alone $100.

But from your links anyway.
Still, the teardown results don’t mean Sony will record a profit of $100 every time it sells a PS4. Selling a game console involves a lot of other expenses, such as promotional campaigns and fees to secure shelf space at retailers, said Mr. Sakai. While the lower cost of PS4 components compared to its predecessor makes it easier for Sony to minimize losses or break even on the hardware side of the PS4 business, “hardware won’t be a huge money maker,” he said.​
 
They shouldn't be using apple as an example of profit on hardware. They're the exception, not the norm because they can charge an arm and a leg for anything and people will buy it up.
 
Sony has pretty much already said that they were going to be losing money on the consoles at launch, but nothing near the PS3's bleeding. I don't follow currency markets to know how they've gone but most of the articles around the time of August and September were saying that the yen's decline vs. the dollar would lead to higher losses on the launch than otherwise. I think the takeaway here is that during the interview with Eurogamer in September (http://www.eurogamer.net/articles/2...-recoup-playstation-4-hardware-loss-at-launch) they're saying that they'll have a profit on the "average" purchase, which I think is plenty fine, since those purchasers should continue to buy the profitable software and services over time.
 
Lord Majestic said:
Now we know why Music Unlimited is as for right now the only music choice for playstation 4 users.
Click to expand...

Both consoles seems abit rushed to market to get a head-start or not get left too far behind by the competitor.
Neither console comes with local mp3-support, or via usb-sticks - and only stream to their services 'Music Unlimited' and 'Xbox Music'.
Xbox One has CD support, but CD's dosn't ripp to MP3/Flac like we saw last gen, atleast on PS3 - DLNA is also scaled back, seems it's only compatible with Windows devices with 'Play To'. Albert Penello told Gamespot that it's possible that it might perhaps change in the future however. :)

On PS4 we'll have to wait for that, CD/MP3/DLNA, however Shuhei confirmed that it has been bumped in importance, after the feedback they got on the FAQ, so we'll see that soon.

I'd assume, there's probably ways to get around these limitations, with the browser - if it's not fixed by the time the included music-subscriptions run out.
- I'd assume if you go to a webpage. Playing music on youtube in the background, or even better bandcamp. And return to the game, and mute soundtrack. :-/
 
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