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Xbox One Component Cost is $90 Higher Than PS4 Thanks Mostly to Kinect

Posted by Jim Tanous on November 26, 2013
Xbox One Manufacturing Cost

Microsoft’s Xbox One costs $90 more to build than Sony’s PlayStation 4, according to analysis by research firm IHS, reported Monday by AllThingsD. With a total manufacturing cost of $471 to the PS4’s $381, the $90 difference is notable considering that the Xbox is priced $100 higher than its competitor.

The largest cost for both consoles is the APU, a roughly $110 AMD part that combines CPU and GPU functions on a single chip. Another large chunk, at least for Microsoft, is the Kinect sensor, with an estimated cost of $75. Sony offers a $60 camera accessory for the PS4, but does not include one with the console.

Rounding out the highest costing components is system memory, or RAM. The Xbox One uses DDR3 memory, with an estimated cost of $60, while the PS4 utilizes higher-end GDDR5 memory, which rings up at about $88. The faster memory found on the PS4 is a key component that gives the console an edge over the Xbox One in terms of raw theoretical performance capabilities.

Even with manufacturing costs coming in below retail costs, a rarity for modern consoles, both Sony and Microsoft will likely lose money in the short term. Revenue splits with retailers, shipping costs, advertising, and, of course, research and development all add a significant amount to each console’s true cost to produce and deliver to customers, to the point that analysts estimate that Microsoft alone could lose as much as $1 billion this year on the product. But with long-term sales generating higher margins as manufacturing costs come down, and with revenue from game licenses and digital content purchases factored in, both companies are expected to reach the “break even” point during this console generation faster than in previous cycles.

The PlayStation 4 launched in North American on November 15 at $399, with a European launch coming this Friday, the 29th. The Xbox One had a “worldwide” launch last Friday, November 22nd, with a price of $499. Initial shipments of both consoles sold out within hours.

Featured Image via iFixit

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