PS4 cost 381.00 to build

I really don't understand these teardown things... unless they actually got told a price by someone at Sony, it's all meaningless. Who knows what deals Sony has with manufacturers and what the real cost actually might be.

Even the talk of the PS3 costs, as far as I'm aware never actually talked about facts of how much Sony was paying just "oh this part would cost about this much, that part about that much, so it must cost X to build".
 
Even if this were true, and I heavily doubt it as its Gamespot, just like BestBuy, they make money from the peripherals and games, not from the general system, that's how a lot of larger companies work.
 
Tudz said:
I really don't understand these teardown things... unless they actually got told a price by someone at Sony, it's all meaningless. Who knows what deals Sony has with manufacturers and what the real cost actually might be.

Even the talk of the PS3 costs, as far as I'm aware never actually talked about facts of how much Sony was paying just "oh this part would cost about this much, that part about that much, so it must cost X to build".
Click to expand...

These estimates usually come from a company that specializes in this type of thing - it's literally a data analyst company whose paid to make these reports. So yes they're just "estimates", but they're normally pretty close. http://www.ihs.com/industry/consumer-retail/index.aspx

I don't think it takes into account other things like marketing, etc etc.

FrEaKy said:
Even if this were true, and I heavily doubt it as its Gamespot, just like BestBuy, they make money from the peripherals and games, not from the general system, that's how a lot of larger companies work.
Click to expand...


Gamespot didn't do the estimate. IHS did.

The PS3/XB360 lost money on every console sold (talking a couple hundred dollars). They made it up on the backend via the larger margin items like peripherals, game sales (like you said) and subscriptions. There was a shift in the dynamic this time around as both companies decided not to go into the negative right off the gate, they wanted a revenue neutral console or one that they could turn a profit on right away (not taking into account R&D/etc).
 
Last edited:
This is irrelevant considering the fact sony publicly said they take a loss on each console
 
I wonder how much the loss is though? Maybe it is a modest profit and the "loss" was PR talk
 
*Advertising
*R&D
*Distribution
*Patent Filing and Security
*Etc, etc, etc

They lost money.
 
wonderfield said:
Factoring in R&D and marketing, they are absolutely taking a loss. It just may not be a loss from a pure BOM perspective.
Click to expand...

Yet every hardware release, whether it be phones or console or video cards, we hear the same people cite the BOM as the only determining factor in the cost of said devices.

This gen, ROI will come much quicker, but it isn't happening any time soon.
 
I know this has been mentioned, but factoring in R&D, selling something that costs $380 to build for $400 would be considered a loss.
 
julliboo said:
I wonder how much the loss is though? Maybe it is a modest profit and the "loss" was PR talk
Click to expand...

Don't forget retail markup. The retailers will want to make something. So if it costs $380 to make and it is selling for $400, safe to say they are taking a hit. They maybe selling these to large retailers for $350 for all we know.
 
Sony directly stated they are taking a loss on each PS4 sold, that implies hardware and manufacturing cost. the estimate is either lowballing costs, or sony overpaid
 
VladDracule said:
Sony directly stated they are taking a loss on each PS4 sold, that implies hardware and manufacturing cost. the estimate is either lowballing costs, or sony overpaid
Click to expand...

Sony doesn't get $399 per console. There's typically a wholesaler and a retailer between them and the end user, and each one of those demands a cut. I can't imagine Sony is getting more than about $350 per console.
 
Still better than what they got per console for the PS3. In a year or two a hardware revision will cheapen things and software sales will likely make up for the loss.
 
Spidey329 said:
So yes they're just "estimates", but they're normally pretty close.
Click to expand...

[citation needed]

I often hear these estimates thrown around, but haven't seen an analysis of their accuracy.
 
Last edited:
I'm pretty sure i just read somewhere that Sony is still selling the PS4 at a loss.
 
If Sony loses money for each PS3/PS4 sold, how do they make profit... by selling games?
 
BOM != cost to actually produce.... just look at Nintendo and how low their BOM is for their console and what the price was for them to make a profit on the Wii U (1 software sale) BOM for Wii U is said to be $180 and they tell it at $299 for a slight loss...

You do the math..... Sony is not making money on $381 BOM and $399 retail. They prolly would not make a profit at $499 either but would be a LOT closer
 
YeuEmMaiMai said:
BOM != cost to actually produce.... just look at Nintendo and how low their BOM is for their console and what the price was for them to make a profit on the Wii U (1 software sale) BOM for Wii U is said to be $180 and they tell it at $299 for a slight loss...
Click to expand...

Supposedly the $381 is complete manufacturing cost. We'll need to wait to see the total breakdown, though.

Even if it is just BOM cost and doesn't include all of the direct costs, Nintendo has a very shitty business model if those numbers are correct and they aren't making a profit.
 
Tudz said:
I really don't understand these teardown things... unless they actually got told a price by someone at Sony, it's all meaningless. Who knows what deals Sony has with manufacturers and what the real cost actually might be.

Even the talk of the PS3 costs, as far as I'm aware never actually talked about facts of how much Sony was paying just "oh this part would cost about this much, that part about that much, so it must cost X to build".
Click to expand...

Having participated in a few cost tear downs, I can tell you that this number is an estimate. Though it is an extremely accurate estimate, likely within ~0.1%, so give or take about $0.48. It's actually pretty easy to do if you've been in the industry long enough. Also keep in mind this is likely only direct material costs only. For instance, labor costs are likely not included, they could be, but I doubt it.Or if any special gluing or taping was needed, it might not be included. The material should be, but labor to put material in place may not be.
 
Parja said:
Supposedly the $381 is complete manufacturing cost. We'll need to wait to see the total breakdown, though.

Even if it is just BOM cost and doesn't include all of the direct costs, Nintendo has a very shitty business model if those numbers are correct and they aren't making a profit.
Click to expand...

Not at all, they break even or lose a bit on each unit sold, but now have a constant revenue stream from that device. They will make money off each game sold. Their break even point may be 20 games per console. It may be 5.

This is similar to the razor market. Each razor handle is sold at cost. Blades make up the revenue stream and profits through volume sales. Same as printers and ink/paper.

I'd also think twice about calling their manufacturing business and pricing models bad for these reasons. It's not. They are not doing well because the WiiU is not selling well. Note: They did post a profit and expect to have higher profits as software units associated with the WiiU increases.

As the market cools to device, demand for software for the device remains fairly constant with a likely uptick. So more profits are made from software sales, and less loss from manufacturing the HW as demand is weak for it. This combines for better overall profitability.
 
Parja said:
Supposedly the $381 is complete manufacturing cost. We'll need to wait to see the total breakdown, though.

Even if it is just BOM cost and doesn't include all of the direct costs, Nintendo has a very shitty business model if those numbers are correct and they aren't making a profit.
Click to expand...

lol, so you have a masters in business?
 
If you count in PR/marketing as part of the cost, you should count the games and services as part of profits. Just saying...

As for just the parts, if it costs 381, and sold for 400, then they probably are selling for a loss... it depends on how much they are sold for when they sell to retailers. Since retailers has to make money too, and from previous statements regarding console sales, I hear the retailer makes a very shitty amount.
 
So your saying Sony is making them at a profit margin of only 10%.....IDK.

Big companies are not your run of them mill builder, they`re locking themselves into MOUs that reserve mass amounts of components for less then MSRP. Etailers on the other hand, have to fight for whatever profit remains, and their biggest margings come from the accessories that they can take on to that system; ie warranties, protective gear, games, controllers etc.

Data analysts are good, but the real story lies in the quarterly results. If they post a net negative operating profit, then yea the $381 is spot on. But if they break even or post positive numbers Im pretty sure the margin is way higher up.
 
Last edited:
pothb said:
If you count in PR/marketing as part of the cost, you should count the games and services as part of profits. Just saying...

As for just the parts, if it costs 381, and sold for 400, then they probably are selling for a loss... it depends on how much they are sold for when they sell to retailers. Since retailers has to make money too, and from previous statements regarding console sales, I hear the retailer makes a very shitty amount.
Click to expand...

Retailers are making about $30-40 per console sold, depending on their supply chain.
 
YeuEmMaiMai said:
lol, so you have a masters in business?
Click to expand...

Nope, but I don't need one either. If they have a difference of $119 between manufacturing cost and sell price and can't make a profit, they're seriously fucking something up. Don't need no bidness degree to make that conclusion.
 
Parja said:
Nope, but I don't need one either. If they have a difference of $119 between manufacturing cost and sell price and can't make a profit, they're seriously fucking something up. Don't need no bidness degree to make that conclusion.
Click to expand...

Where are you getting this $119 figure from?

But, yes - if you think BOM = total cost to produce, you do need some business education.
 
Fuck it, if you can't even be bothered to read my post, there's not much point in me addressing your post.
 
I wonder how long it'll take for Sony to start making profits on these. Prob not too much considering pretty much everybody will be getting the PSN subs for online gaming and that they hoped to beat out the xbox in sales by the lower price.
 
Parja said:
Nope, but I don't need one either. If they have a difference of $119 between manufacturing cost and sell price and can't make a profit, they're seriously fucking something up. Don't need no bidness degree to make that conclusion.
Click to expand...

Apparently you "don't need no" Engrish lessons eitha.
 
So point of question since the xbox launch sales are closing up and it appears this thread has Business Majors, MBA holders, and your average "Bidness experts"

a) has Sony better estimated their initial production numbers (since PS4s were in stock a week after they went on sale
b) Has MS underestimated demand looked up XBox 1s in local stores all gone and target rep said backordered till 1st week of decemeber
c) has MS held back on units to drive up demand on XB1s
d) has PS4 sales numbers stabilized
 
Parja said:
Nope, but I don't need one either. If they have a difference of $119 between manufacturing cost and sell price and can't make a profit, they're seriously fucking something up. Don't need no bidness degree to make that conclusion.
Click to expand...

but one does need common sense....

B.O.M. on Wii U is what I stated. B.O.M. != production costs.

Production costs = BOM + everything else required to get the product out the door. This would include Nintendo's labor, R&D, and advertisement. so yes $119 isn't squat but it is close enough that at this point in time, despite slow sales, the Wii U IS profitable for the big N (they have stated that 1 software sale = profit turned) and have sold about 5:1 in terms of game to console sales. Based upon Nintendo's own words I would estimate the total cost of production to be around $225... (the split between the Wii U basic and Deluxe).
source for above game to console sales ratio...
http://www.nintendo.co.jp/ir/en/sales/hard_soft/index.html
 
Last edited:
You must log in or register to reply here.
Back
Top