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Mr.Playstation said:
No, it would also probably cost more than $700 if they indeed go ahead with this.


a lot of the manufactering cost in the PS4 goes also to the Dual Shock 4, Motehrboard, Plastic case, Hardrive and Power Supply. These components have to barley change or improved. 300$ more can buy you a lot more once you have the 400$ allready established. 

The APU from AMD cost 100$ to produce on the PS4, ad another 100$ and you could easily render 4K.

 

For the PS4, iSuppli estimates that the APU was slightly cheaper ($100), but the GDDR5 RAM cost a lot more ($88). The hard drive ($37), controller ($18), and various other bits bring the total build cost of the PS4 to $381.

http://www.extremetech.com/gaming/171697-xbox-one-costs-more-to-make-than-the-ps4-thanks-to-esram-and-kinect