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Forums - Sony Discussion - Report: PS5 manufacturing cost pushed to $450 due to competition and scarcity of parts

numberwang on 14 February 2020

Retail price is typically twice the production cost. Sony has to take a big L in the beginning here.

Compare to the iPhone XS with comparable component costs.

As part of its teardown, TechInsights estimated the cost for each component. Its total is $443, as compared to the $1,249 price tag for the product. So just 35 percent of the purchase price goes to pay for the actual hardware.

https://www.cultofmac.com/579177/iphone-xs-max-production-cost-bill-materials-bom/



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Cerebralbore101 on 14 February 2020
numberwang said:

Retail price is typically twice the production cost. Sony has to take a big L in the beginning here.

Compare to the iPhone XS with comparable component costs.

As part of its teardown, TechInsights estimated the cost for each component. Its total is $443, as compared to the $1,249 price tag for the product. So just 35 percent of the purchase price goes to pay for the actual hardware.

https://www.cultofmac.com/579177/iphone-xs-max-production-cost-bill-materials-bom/

Smartphones are a rip off. Consoles are a damned good deal. 

Any company making over $1.15 for each dollar they spend, is price gouging customers. 



Mr Puggsly on 14 February 2020
Nu-13 said:
shikamaru317 said:

Not really. PS3 was sold at something like a $150-200 loss early gen as I recall. A $50 loss per console is chump change compared to that, especially since accessories like extra controllers, official headsets, etc. are all sold with quite a bit of mark-up (I believe game controllers cost less than $20 to make, but are sold for $50). It's also worth noting that more console game sales are digital than ever before, and the profit margin on digital games is higher than on physical games. And course they have PS+ subs and PS Now subs making them money as well. They can easily offset a $50 loss on hardware early gen between all of those sources of revenue.

A smaller loss than a colossal one doesn't make it small and it wouldn't be $50 (which would still be a lot).

Given they make more money on digital sales and subscriptions now, you would think they'd be a little more willing to sell at a loss. Especially MS since they have Game Pass.

Now that I think about it, it's very likely I may buy a Series X at launch simply because I won't need to buy games to enjoy it. I will just access content via Game Pass.



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jonathanalis on 14 February 2020

500$, with 3 month PSN.
lock it.



LurkerJ on 14 February 2020

Between MS and SONY, the company who manages to sell their next gen console for 399$ wins, regardless of their "exclusive" content.



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Cerebralbore101 on 14 February 2020
LurkerJ said:
Between MS and SONY, the company who manages to sell their next gen console for 399$ wins, regardless of their "exclusive" content.

Yes, because MS is suddenly going to do fantastically in Europe and Japan, because PS5 is $500. 



method114 on 14 February 2020
LurkerJ said:
Between MS and SONY, the company who manages to sell their next gen console for 399$ wins, regardless of their "exclusive" content.

Nope. I don't believe everyone is going to willingly abandon their PS4 library,trophies, and friends over $100. If they save more than that then yea I can see people leaving their current ecosystem.



haxxiy on 14 February 2020

I'm also thinking it's going to be $500 even if Microsoft were to bite a larger loss and retail at the same price with a more powerful console. Sony has the brand recognition, after all, and there's always the possibility to throw smokescreens and PR spins like they did when talking about the PS2's and the PS3's specs.

Not to mention you can always lower the price later on.



 

 

 

 

 

Pemalite on 14 February 2020

Called this a year or two ago, that if next-gen leverages GDDR6 and NAND, that they will be subject to commodity price fluctuations which may impact the consoles.

NAND should be increasing in price here on out... So it will be interesting to see how things end up.



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numberwang on 14 February 2020
the-pi-guy said:

numberwang said:

Retail price is typically twice the production cost. Sony has to take a big L in the beginning here.

Since when?  

Phones tend to make a lot of profit.  Consoles tend to about break even, because console makers sell the software and accessories at a solid profit.  Whereas phone makers don't sell all the software, instead that goes to the OS makers.  

https://www.engadget.com/2013/11/19/ps4-costs-381-to-make-according-to-hardware-teardown/

https://www.afterdawn.com/news/article.cfm/2008/12/31/isuppli_releases_bom_report_on_playstation_3_costs

https://technology.ihs.com/467389/microsoft-xbox-one-hardware-cost-comes-in-below-retail-price-ihs-teardown-reveals

https://www.theregister.co.uk/2005/11/24/xbox360_component_breakdown/

They might decide to lose a small portion of money, but it's not going to be an unusual amount.  

Production is only one part of the whole business chain. Retail price has to cover shipping from the factory to warehouses, tariffs, all retail chain costs, customer delivery, warranty period, labor, all taxes and profits for every middleman. We have to see how much Sony is willing to subsidize hardware now that they have the upper hand again. There is a good chance they come with a basic (500GB SSD and potentially gimped in other ways) and premium version (2TB SSD).