Sony breaking even on PS4 hardware costs

IHS teardown of new console puts Sony’s cost of goods and assembly at $381 per system.

Sony breaking even on PS4

The gaming industry is officially through the looking glass. Nintendo, a long-time advocate of turning a profit on its hardware, is selling every Wii U at a loss, while Sony is just about breaking even on the PlayStation 4.

According to an AllThingsD report, market research firm IHS has conducted a teardown of the PS4 and estimated Sony’s cost of parts plus assembly on the hardware to be $381, while the console itself retails for $399. That’s a far cry from the PS3’s launch economics, when IHS estimated Sony manufacturing cost for each machine at $805, far exceeding even the system’s already steep $599 retail price.

Most of Sony’s PS4 costs are accounted for by the system’s CPU and memory. The AMD chip at the heart of the system is estimated to run Sony about $100, while another $88 was attributed to 16 separate memory chips in the system. The Dual Shock 4 controller was pegged at an $18 build cost.

“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,” IHS analyst Andrew Rassweiler told the site.

The IHS estimate falls in line with comments Sony Computer Entertainment Worldwide Studios head Shuhei Yoshida made to GamesIndustry International prior to the PS4 launch last week.

“In a sense, we’re doing great because we’re not losing billions with the launch of PS4,” Yoshida said. “In fact, we’re pretty much breakeven in this launch year of PS4…”

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