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Locked: Report: PS5 manufacturing cost pushed to $450 due to competition and scarcity of parts

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

drkohler said:
shikamaru317 said:

Most likely. Industry analyst Zhuge is estimating the current build cost of Xbox Series X at somewhere in the $460-520 range, based on the current cost of parts, with the rumored specs for Series X.

Am I the only one who remembers who Zhuge actually is? Years ago. he started posting in another froum, telling he is a Pakistani PhD student in medicine. I don't know how/when that ended and how he tur4ned into an industry analyst. Quite a strange career change, but I'm pretty sure Zhuge has no clues whatsoever about mass manufacturing of electronic devices and components (or mass manufacturing of anything). He is just parroting numbers he finds on the internet. He is well in line with all those "insiders", working on the principle that if enough people shoot at a barn door, someonw will eventually hit the wood.

I remember when Zhuge used to post here on VGC back when I first joined VGC. No idea what he did before that. As for his claims about being an analyst, they seem to be legit, you can find his profile on the Niko Partners website:

https://nikopartners.com/about/



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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/

Maybe for Phones, because the phone manufacturers are all rip-offs, but it has never been like that for game consoles. Historically speaking, consoles were often sold at a small loss, it wasn't until this current gen that consoles were sold at a profit. As I recall, PS4 cost $381 to build and ship and they sold it for $400. XB1 cost $471 to build and ship (including kinect) and they sold it for $500 at launch.



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.



drkohler said:
shikamaru317 said:

Most likely. Industry analyst Zhuge is estimating the current build cost of Xbox Series X at somewhere in the $460-520 range, based on the current cost of parts, with the rumored specs for Series X.

Am I the only one who remembers who Zhuge actually is? Years ago. he started posting in another froum, telling he is a Pakistani PhD student in medicine. I don't know how/when that ended and how he tur4ned into an industry analyst. Quite a strange career change, but I'm pretty sure Zhuge has no clues whatsoever about mass manufacturing of electronic devices and components (or mass manufacturing of anything). He is just parroting numbers he finds on the internet. He is well in line with all those "insiders", working on the principle that if enough people shoot at a barn door, someonw will eventually hit the wood.

Calling him a industry analyst was the best joke i Saw today. 



 

drkohler said:
shikamaru317 said:

Most likely. Industry analyst Zhuge is estimating the current build cost of Xbox Series X at somewhere in the $460-520 range, based on the current cost of parts, with the rumored specs for Series X.

Am I the only one who remembers who Zhuge actually is? Years ago. he started posting in another froum, telling he is a Pakistani PhD student in medicine. I don't know how/when that ended and how he tur4ned into an industry analyst. Quite a strange career change, but I'm pretty sure Zhuge has no clues whatsoever about mass manufacturing of electronic devices and components (or mass manufacturing of anything). He is just parroting numbers he finds on the internet. He is well in line with all those "insiders", working on the principle that if enough people shoot at a barn door, someonw will eventually hit the wood.

Are you sure you don't have him mixed up with someone else?  

He's been doing analyst type stuff for a good portion of the last decade.  

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.  



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We all know it will be priced at $500.



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.



 

 

 

 

 

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.



--::{PC Gaming Master Race}::--

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).



numberwang said:
the-pi-guy said:

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).

I'm very aware.  The point I was making was that that kind of loss is normal.