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.
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.