Cost to Build PS4

[Demon_Skeith]

According to a new teardown analysis by research firm IHS, the assembly and combined cost of the components used to build the PlayStation 4 is estimated at $381 US, which is only $18 shy of its retail price in North America.

Previous reports state that thin gross margins on electronic products like this are a rarity, but this is nowhere near as drastic a margin as the PlayStation 3's, which sold at $599 US at launch and cost a whopping $805 to build. Even as costs came down later in the console's lifecycle, Sony was cutting retail prices, and they were still selling at a loss in 2009.

“If Sony could build the PS4 for a lower cost it would do so" said IHS analyst Andrew Rassweiler in an interview with allthingsD. "But if history is any indicator, it would also lower its retail price.
"It looks like once again, when it comes to profits, it’s all about the game titles."

The nitty gritty of the teardown revealed that the chips take up a lot of the cost of the internal components, and the PlayStation 4 has an "unusually large" microprocessor built in that costs $100 to manufacture. This combined with 16 individual memory chips at $88 makes up more than half of the cost. The other half comes from the combined costs of the hard drive, wireless chips, an optical drive and the controller.

With the production and retail cost so close, Rassweiler explained, Sony is taking a small gross margin or a possible loss. “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."

source

High priced items don't sell, as proven with PS3. This is a better loss than with PS3 sales.

 

[froggyboy604]

I agree this is a better loss than the PS3.

I disagree, high price items sell if they are advertised to the right type of buyer, and are well made like iPads, iPhones, Apple Macbook pro and Alienware Gaming computers which all sold in the millions.

The Steambox price maybe higher than the Xbox One, and PS4, but it may sell as well in the long run because of cheaper games, the Steam brand name, and faster gaming parts.