The new PlayStation 4 sells for $399 and costs $381 to build, according to an analysis from research firm IHS. November 19, 2013 5:27 AM PST Sony's PlayStation 4. (Credit: Sony) Sony squeezes just $18 out of each PS4 sold, says research firm IHS, which means it may not even see a profit on the new console. In a teardown examination of the PlayStation 4 released to AllThingsD, IHS discovered that each console costs $381 to manufacture, which Sony then sells to the consumer for $399. That seems like a meager amount, however, it's a step up from the loss seen on each PS3. A similar IHS analysis of the PlayStation 3 conducted in 2006 found that each console cost $805 to build and sold for $599. The cost of components gradually came down. But even by late 2009, Sony was still paying $336 for the manufacturing of each PS3 and selling them for $299 a pop. Which components are the most costly? IHS found that the CPU and memory chips account for more than half of the cost. One problem is that around a third of the chips made suffer from certain defects and must be discarded, raising the overall price tag. Ultimately, that $18 gap between manufacturing cost and selling price could mean Sony isn't even making a profit on each PS4, according to IHS analyst Andrew Rassweiler. "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," Rassweiler said. Instead, Sony's plan is to earn most of its profits on games, the same strategy used in selling the PS3.
The new PlayStation 4 sells for $399 and costs $381 to build, according to an analysis from research firm IHS.
Sony's PlayStation 4.
(Credit: Sony)
Sony squeezes just $18 out of each PS4 sold, says research firm IHS, which means it may not even see a profit on the new console.
In a teardown examination of the PlayStation 4 released to AllThingsD, IHS discovered that each console costs $381 to manufacture, which Sony then sells to the consumer for $399. That seems like a meager amount, however, it's a step up from the loss seen on each PS3.
A similar IHS analysis of the PlayStation 3 conducted in 2006 found that each console cost $805 to build and sold for $599. The cost of components gradually came down. But even by late 2009, Sony was still paying $336 for the manufacturing of each PS3 and selling them for $299 a pop.
Which components are the most costly? IHS found that the CPU and memory chips account for more than half of the cost. One problem is that around a third of the chips made suffer from certain defects and must be discarded, raising the overall price tag.
Ultimately, that $18 gap between manufacturing cost and selling price could mean Sony isn't even making a profit on each PS4, according to IHS analyst Andrew Rassweiler.
"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," Rassweiler said.
Instead, Sony's plan is to earn most of its profits on games, the same strategy used in selling the PS3.
