Sony ekes little to no profit from PS4, says report

The new PlayStation 4 sells for $399 and costs $381 to build, according to research firm IHS.

Sony's PlayStation 4.
Sony's PlayStation 4. Sony

Sony squeezes $18 out of each PS4 sold, says research firm IHS, which means the company may not see a profit on the new console.

In a tear-down examination released to AllThingsD, IHS revealed that each console costs $381 to manufacture, which Sony then sells to the consumer for $399. That seems like a meager amount; however, it's a step up from the loss seen on each PS3.

A similar IHS analysis of the PlayStation 3 conducted in 2006 found that each console cost $805 to build and sold for $599. The cost of components gradually came down. But even by late 2009, Sony was still paying $336 to manufacture each PS3 and selling them for $299 a pop.

Which components are the most costly? IHS found that the CPU and memory chips account for more than half of the cost. One problem is that around a third of the chips suffer from certain defects and must be discarded, which raises the overall price tag.

"If your cost is within $10 to $20 of the retail prices, there's very little chance you're making a profit on the console," IHS analyst Andrew Rassweiler said.

Sony has indicated that it plans to earn most of its profits on games, the same strategy used in selling the PS3.

About the author

Journalist, software trainer, and Web developer Lance Whitney writes columns and reviews for CNET, Computer Shopper, Microsoft TechNet, and other technology sites. His first book, "Windows 8 Five Minutes at a Time," was published by Wiley & Sons in November 2012.

 

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