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IHS estimates Xbox One costs $471 to make, AMD gets $110 per unit

  • After tearing down the device, IHS estimates the Xbox One (MSFT -0.1%) and its bundled Kinect sensor cost $471 to produce. The Kinect accounts for $75 of that total.
  • With the console sporting a retail price of $499, that suggests Microsoft could be selling the One for a loss after accounting for expenses such as such as fulfillment costs and retailer cuts. As with past consoles, manufacturing costs are bound to decline over time, as component prices come down.
  • Interestingly, IHS thinks CPU/GPU supplier AMD (AMD +2.2%) receives $110 per One unit. That's $10 more than the firm thinks AMD gets for each shipment of a very similar processor going into the PlayStation 4 (total estimated manufacturing cost of $381).
  • The report comes a few days after Microsoft announced it sold 1M One units in the console's first 24 hours of availability, and a day after Nomura predicted the Xbox division will likely lose over $1B in 2013, after factoring expenses such as marketing and R&D. Today, Janney estimates One shipments could hit 6M by March 31.
Comments (10)
  • Bunge42
    , contributor
    Comments (43) | Send Message
     
    AMD: Y U NOT $9/share? :)
    26 Nov 2013, 03:06 PM Reply Like
  • King Rat
    , contributor
    Comments (567) | Send Message
     
    because revenue ≠ profit.
    26 Nov 2013, 03:41 PM Reply Like
  • Justin Jaynes
    , contributor
    Comments (3028) | Send Message
     
    Long $AMD -

     

    XBOX one APU is bigger.

     

    363 mm^2 vs 348 mm^2

     

    5% bigger chip + looks to be a little more complicated than the PS4 with the inclusion of the ESRAM

     

    Higher price for Xb1 APU makes sense.
    26 Nov 2013, 03:30 PM Reply Like
  • kjurden
    , contributor
    Comments (733) | Send Message
     
    Unreal...Looks like Wall Street Analysts massively under estimated XBox One sales and the % profit that AMD gets for each unit. Who would have guessed???
    26 Nov 2013, 03:31 PM Reply Like
  • kwright62
    , contributor
    Comments (11) | Send Message
     
    The real bottom line is the frequency consumers use their Xbox to buy movies, TV and games. There may be some profit associated with those transactions.......
    26 Nov 2013, 03:53 PM Reply Like
  • steveto
    , contributor
    Comments (205) | Send Message
     
    Ok...so AMD gets about 20% revenue from each One sold..

     

    what does that mean in stock value if $1b worth of Ones are sold? That is ~ 200 million going to AMD. That's a lot, but for an international chip maker..it's not a big deal.

     

    The XBox, like the PS4 are consoles that would have a lifecycle of 7-10 years. I equate the XBOX and PS4 to Printers. The profit never comes from printers, but rather, the ink.

     

    In this case, it's the game makers. That is where you have to look.

     

    There is the one off business model which is gonna be huge since there is no compatibility with the older gens. The other being subscription based and I am sure there is even a pay per use or F2P type where you have to purchase in-game items.

     

    Look into gaming and not AMD or MSFT.
    26 Nov 2013, 03:53 PM Reply Like
  • Justin Jaynes
    , contributor
    Comments (3028) | Send Message
     
    From the 3rd quarter CFO commentary, console APUs (PS4+Xb1) added about $400M in revenues to AMD's topline, with ~15% (mid teens to use the CFO's words) operating margin.

     

    $400M in revenues is ~13% of AMD's market cap - and this was sales in 1 quarter. If AMD is able to generate $300M in sales per quarter going forward, this adds yearly revenues to the company's top line equivalent to about 40% of the company's entire market cap.
    26 Nov 2013, 04:00 PM Reply Like
  • hopper211
    , contributor
    Comments (4) | Send Message
     
    Hard to believe Reuters drop them from a 3 to 1 this week. Any clue.
    26 Nov 2013, 10:00 PM Reply Like
  • kjurden
    , contributor
    Comments (733) | Send Message
     
    @hooper211...Where did you get your information from? The link below clearly shows that on a score from 1-5, AMD has a rate of 2.87

     

    http://reut.rs/1c8f58Z
    27 Nov 2013, 05:31 AM Reply Like
  • hopper211
    , contributor
    Comments (4) | Send Message
     
    From my brokerage account site. That's good to know
    27 Nov 2013, 08:13 AM Reply Like
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