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IHS: PS4 costs $381 to make, AMD receives $100 per unit

  • Shortly after Techinsights estimated the PlayStation 4 (SNE) has a manufacturing cost of $296, IHS, which is well-known for its phone/tablet teardowns, has estimated Sony's console has a manufacturing cost of $381, or just $18 less than its retail price of $399.
  • Sony has said it expects to initially sell the PS4 at a loss, but will turn a profit if a user buys one launch title and signs up for a $50/year PlayStation Plus subscription. Manufacturing costs are bound to drop over time, as prices fall for various components.
  • IHS thinks CPU/GPU supplier AMD is receiving $100 per PS4 unit. If reasonably accurate, that figure could mean AMD is also receiving ~$100 from Microsoft for each Xbox One produced, given the PS4 and One rely on very similar AMD Jaguar processors.
  • AMD shares have been pressured by concerns the company sacrificed ASPs/margins to secure its console wins.
  • Sony recently announced PS4 sell-through passed 1M within its first 24 hours of its North American launch. That puts the company on its way to hitting a target of 5M global sales in FY14 (ends March '14).
Comments (13)
  • kjurden
    , contributor
    Comments (734) | Send Message
     
    That's a bit more than all of the Wall Street analysts estimated. Their numbers and projections were based on $70 per unit.
    20 Nov 2013, 05:52 PM Reply Like
  • Yaron Ron Reuven
    , contributor
    Comments (465) | Send Message
     
    This shows why sony management doesn't understand about consumer that Apple knows very well--they (consumers) don't care how much the system costs to build and whether you're making profits, they just want it to work well. This means that if you can sell it for $399 then consumer would also be willing to pay $449 or $499, and still remain price competitive with Microsoft.
    20 Nov 2013, 06:29 PM Reply Like
  • Wax
    , contributor
    Comments (22) | Send Message
     
    Apple is selling brand. Its customers don't care much about the system costs.
    Sony and Microsoft don't have that strong brand image. Lower price will sell more.
    20 Nov 2013, 08:23 PM Reply Like
  • Justin Jaynes
    , contributor
    Comments (3153) | Send Message
     
    perhaps you missed the reaction when everyone applauded Sony's $399 price tag after hearing the xbox would be $499?
    http://cnb.cx/1bElS6I

     

    And this is on CNBC
    "Sony, however, seized the opportunity to win over consumers—announcing Monday night that the PS4 would cost $399—$100 less than the Xbox One. And undercutting the Xbox One's price was just one of the many shots Sony took at Microsoft at its annual E3 press conference.
    To raucous applause, Sony's Jack Tretton also announced that the PS4 would put no restrictions on used games, letting players play used games and lend titles to friends. Additionally, he said, the system will not require any form of Internet connectivity, a direct hit at Xbox One's convoluted online connection requirements."

     

    Sony lost ~$200 per console when the PS3 launched. Now they're breaking even, maybe even making a tiny profit. This is a stark difference from the PS3.
    21 Nov 2013, 01:34 AM Reply Like
  • Neosephiroth86
    , contributor
    Comments (272) | Send Message
     
    Do they produce the consoles chips (for Sony, Nintendo and Microsoft) at TSMC?
    21 Nov 2013, 04:02 AM Reply Like
  • Justin Jaynes
    , contributor
    Comments (3153) | Send Message
     
    AMD licenses IP to Nintendo (doesn't produce chips)

     

    Xbox One + PS4 are made at TSMC
    21 Nov 2013, 10:06 AM Reply Like
  • Neosephiroth86
    , contributor
    Comments (272) | Send Message
     
    If they are obliged to buy a certain amount of wafers from GloFo can't they produce some consoles chip there in the future?
    Like in a worst case scenario where Kaveri flops....

     

    Mine's just a guess...
    21 Nov 2013, 10:13 AM Reply Like
  • wrscomncents
    , contributor
    Comments (661) | Send Message
     
    The PS4 does not include a camera which is the main difference in the price. The XBOX will do some things that the PS4 will not because of the camera. I really don't care which box is purchased since it will effect AMD the same either way. It is a little misleading though to compare the price difference without looking at the differences in the two machines.
    21 Nov 2013, 12:36 PM Reply Like
  • kjurden
    , contributor
    Comments (734) | Send Message
     
    @wrscomncents,,,does the PS4 have facial recognition, voice commands, or connect? It's probably not germane to this discussion, but I'm pretty sure there are some fairly big differences that affect the pricing of the units.
    21 Nov 2013, 07:30 PM Reply Like
  • wrscomncents
    , contributor
    Comments (661) | Send Message
     
    @kjurden

     

    I agree.
    21 Nov 2013, 09:16 PM Reply Like
  • Arvinpinal
    , contributor
    Comments (230) | Send Message
     
    Wha.. so 1st day 1 million PS4 sold meaning $100 million sales for AMD... This Friday 11/22 Xbox one launch so another big sales jump !!... If I am not wrong this means AMD will have good sales in the next few years which will help company to next level as well as high market share ! Good Job from new CEO
    20 Nov 2013, 06:33 PM Reply Like
  • toonies
    , contributor
    Comments (421) | Send Message
     
    Operational margin 15-16% is very reasonable. It is hard to say they sacrificed something. And if we count production volumes and a lot of synergies coming not only from gaming market then we will see very different picture like the one, made up by some analysts these days.
    20 Nov 2013, 07:04 PM Reply Like
  • sharke
    , contributor
    Comments (36) | Send Message
     
    $381 cost may or may not be accurate. lets give a 10% give and take. so probably if sony says its selling at a loss. probably the cost will be around $400 to produce. amd might actually have more profit then what people expect.
    20 Nov 2013, 08:58 PM Reply Like
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