back to article It's the games, STUPID: Sony makes 'about $18' on each PlayStation 4

According to a teardown report from analyst IHS, Sony is making just $18 on each Playstation 4. This may not sound like much, but it marks a massive improvement from the days in which the Japanese firm made huge losses on the sale of games consoles. According to the report, each Playstation 4 costs Sony about $381 to manufacture …

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Silver badge

Does that include returned/failed units

18$ is approx 5% of the manufacturing cost, therefore only 1 in 20 units needs to have a problem and then they start losing money.(again)

Blue Light of Death anyone.........

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Re: Does that include returned/failed units

...please, Its called the pulsing blue dickpunch of sadness.

Carry on...

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Anonymous Coward

Re: Does that include returned/failed units

The failure rate is likely well below 1 in 20, despite what the over reacting over hyping media might tell you.

But if they are manufacturing defects and the defect rate is above what Foxconn have committed to then it's not Sony who will be footing the bill.

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Anonymous Coward

Re: Does that include returned/failed units

About 1 in 800 is the current rate, which is well within normal for this sorta technology. Microsoft won't get anywhere close to that with theirs and Flex's track record.

Microsoft will be profitable right away, only because the Xbox One is stuffed fully of cheap low-spec components, and yet comes at a premium price. Not sure how this benefits gamers dumb enough to buy into the XBone thou.,

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Re: Does that include returned/failed units

I highly doubt any company will do it for that little of profit. I for one wold like to examine their books and let them prove their claims especially if they are only paying pennies a day for labor.

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Holmes

Re: Does that include returned/failed units

You're assuming that they write off the returned/failed unit instead of a) refurbishing it (for other returns), b) use it for spares, c) repairing it.

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Re: Retail price?

I assume they consider the money they make over the lifetime of the unit, i.e. game purchases, PSN subscriptions, DLC, multiplayer (which apparently they charge for now), cloud gaming, video rental, music streaming, kickback from the likes of Netflix / Amazon / Hulu, any advertising revenue they derive etc.

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Bronze badge

Re: Retail price?

"What about about shipping the units, storing them, and the margins the retailers will be demanding.

And then not forgetting taxes (VAT etc), any import duties and so on."

All of which were covered in the article. And the title of the article. And history. It's all about the GAMES.

And, seemingly the accessories, e.g. the controller, which costs half of what it sells for. Judging by the fact the PS3 controller STILL cost £40 6 years after the release of the PS3, that alone is a tidy earner for Sony.

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Bronze badge

Re: Retail price?

Reading some of the reports of those who have contacted Sony over faulty boxes I expect the profit will come from them upselling an extended warranty for something that isn't actually working.

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And how much on PSN? And how much on content downloads? And how much on game DLC? It's about the subscription, stupid!

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What About the the rest?

381 to build but what about their fixed costs like IP acquisition, engineering, factory overheads, logistics, Admin costs... it's nice to know that they're making $18 when you just look at parts and labor but I think they're losing a good chunk when you factor in everything else...

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The analysis pulls figures from out of thin air, and clearly the price of the AMD APU, at $100, is tantamount to saying "we don't know". In addition how is it "three times as big" as any other 28nm chip? It's far smaller than high end 28nm GPU dies for a start. So they've pulled yield figures out of their rears as well, without noting that the APU has redundancy built in - 20 CUs instead of 18, for example. Yield will be higher than the 66% they are saying: The process is mature. It's well known. And the die has redundancy.

The $88 price for the GDDR5 memory is probably realistic (although Sony's individual deals with the memory manufacturer aren't known), but the price will drop over time, as will the price for the APU.

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Anonymous Coward

Re: Faking accounting,evading taxes..more marketing bull.

The FUD is strong in this one.

He may yet astroturf his way to command of the Death Star.

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(Written by Reg staff)

Re: Re: Faking accounting,evading taxes..more marketing bull.

Or to the notice of your local friendly mod, who shitcans his libellous tinfoil hattery.

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Silver badge

Re: Faking accounting,evading taxes..more marketing bull.

It doesn't matter how much it costs AMD to make the chips, what matters is how much they are selling them to Sony for (have you looked at the retail price of Intel CPU's?). Despite your rantings the GPU in these devices is reasonably good, which is the important factor for a games machine. Sony could have either bought an Intel device, and limited themselves with Intel's sub-par integrated GPUs, or bought discrete GPUs from AMD or nVidia, which would have significantly increased the BoM costs.

The jaguar is a compromise, decent GPU performance and reasonably quick CPU cores, in a single package and at a price that makes the console economical to build. The $100 price is an estimate based on the prices that IHS can get. Sony probably got a better deal than that, but not by a huge amount.

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Trollface

Re: Faking accounting,evading taxes..more marketing bull.

Nice to see the house is cracking down on shills! :) Now can you shoot down TheVogon's auto-libel posts? It's getting really obvious these days he's mostly FUDding for money...

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Bronze badge

Yes, they could be making only $18...

But then again they might be making $100 per unit depending on economies of scale etc. Only Sony will know.

@ Joerg - just because it's on the internet doesn't make it true. Your post looks like a 'gasm of pointless noise to me.

Finally... "We're looking to be break even or low margin at worst on [Xbox One] and then make money selling additional games, the Xbox Live service and other capabilities on top," he said.

Hi Microsoft ... not from me you won't.

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Re: Yes, they could be making only $18...

You Sony employees are beyond pathetic.

You are doing damage control in a real mafia way to avoid people from knowing the truth about your scam frauds.

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Happy

Re: You Sony employees are beyond pathetic.

And you MS shills are awesome!

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Facepalm

Re: Yes, they could be making only $18... @Joerg

>>You Sony employees are beyond pathetic.

You are doing damage control in a real mafia way to avoid people from knowing the truth about your scam frauds.<<

You Microsoft employees are beyond pathetic.

You are doing propaganda control in a real conspiracy theories way to distract people from knowing the truth and inventing scam frauds when in fact its just a fuck up!

To accuse someone who disagrees with you as working for Sony, as only your opinion can be right and everyone else is ‘in on it’ is just ridiculous

Regards

S̶o̶n̶y̶ ̶U̶K̶ ̶M̶a̶r̶k̶e̶t̶i̶n̶g̶ ̶d̶e̶p̶a̶r̶t̶m̶e̶n̶t̶… uh, um random person…

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Re: You Sony employees are beyond pathetic.

@sabroni: I don't work for Sony, Microsoft, AMD nor Nvidia. But you clearly do.

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Bronze badge

Re: Yes, they could be making only $18...

These breakdowns make a lot of assumptions, but they are usually the most accurate costings that are publicly available. Some of the parts will be very accurate (i.e. RAM), while others will be guesses (i.e. CPU based on typical cost of a large, high performance GPU using TSMC or similar).

Don't forget that over the lifetime of the console there are likely to be multiple revisions and at least one major component shrink that will reduce the costs further and there are typically discount points for most of the components when they hit various (large) volume numbers.

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Up shot of this is...

I don't really care - you are shafted with everything else. Really the consoles should be free.

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Oooh, that means over 100% mark up on the controllers then (closer to 200%)

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That's what I thought - $18 markup on the console seems like a pretty good deal but 3 x the price for the controller and you only get one ! Let's face it, pretty much everyone except the loneliest bastard in the world is going to want two controllers at least (if only to swap out when the battery dies mid-game) so the profit immediately jumps to more like $50 per unit sold in reality.

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Anonymous Coward

Huge? Pahhhhhhh

Rassweiler told ATD that the AMD chip was the largest processor his firm had ever seen, at a size of 350mm2. "This chip is just gigantic,” Rassweiler continued. “It’s almost three times as big as the next biggest chip we’ve seen.”

I bet he tells his Mrs that his gentleman sausage is 6" too

350mm2 is not huge

350mm2 is not even large

3 times as big as the next biggest we've seen? Not seen many chips then

A Tukwila is twice that and I though it was dwarfed by some some GPUs.

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Sony say otherwise

In an interview with Eurogamer back in September Sony stated they will be making a loss on each console and recoup the costs if its sold with a game and controller at RRP

http://www.eurogamer.net/articles/2013-09-20-sony-expects-to-recoup-playstation-4-hardware-loss-at-launch

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Anonymous Coward

Re: Sony say otherwise

They'll be including the four or five year research + development process in those costs. That's going to be a substantial amount.

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Re: Sony say otherwisenot just that

It may cost Sony $381 to manufacture the games console but they don't sell direct to the public, that $399 is the retail price for the stored to sell at, not Sony and any profit does not go back to Sony.

Sony manufactures the console, they then sell it to an official wholesaler, the official wholesaler then sells it to the retailer who then sells it at $399. Sony gets paid by the wholesaler, not the retail outlet and not the customer. Now considering the retail outlet needs to recoup shipping costs, as well as turn a profit they would not buy these consoles from the wholesaler at $399 per unit. The wholesaler also needs to recover costs and make a profit while selling it at a price the retailer can cover costs and make a profit.

That $18 difference between manufacture and sale price is not going to cover the retailer's, the wholesaler's and Sony's costs while making all three of them a profit. Someone has to make a loss and its not going to be the retailer or the wholesaler

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Call it an iPlaystation 4

And they could have gotten away with making another $200+ on each unit.

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Bronze badge

its obvious rubbish, AMD FX 8 cores are $50 on alibaba when ordering 5, not in a 1 million bulk buy, they would cost a random $0.30

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Stop

The problem is

that it ISN'T an FX core. The closest thing you can buy off the shelf is the A10 series, but this is a custom chip with double the number of CPU cores and 3 times the number of GPU cores.

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Re: The problem is

FX are better and faster and has more on chip controllers etc etc etc

after currency exchance and cheap labour, AMD probably make $1 on every chip, while they sell for $0.30 OEM

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Stop

Re: The problem is

Firstly there's no way that AMD could even make an FX for $0.30, never mind sell them for that.

Secondly FX's don't have integrated GPUs, which make them much smaller chips and much cheaper to make.

Thirdly custom parts are always more expensive than off-the-shelf.

Fourthly the speed of the CPU isn't relevant here, nor are the number of controllers. This is for a gaming box and is going to be limited by the GPU most of the time and has zero need for expansion.

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Bronze badge

Re: The problem is

but in hong kong or china in their currency, and buying materials and paying for labour, $0.30 is $20

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Anonymous Coward

Its the Pulsing Failure Feature (PFF), enough with the Genitalia References... it wont catch on.

http://www.urbandictionary.com/define.php?term=pff

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Anonymous Coward

Like that's gonna stick in someone's memory better.

Not even half as catchy.

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Silver badge

The "dickpunch" whatever is a CAD joke that indeed is growing stale. But then so is the MS powered FUD going on. I'd like to see what happens when the X Bone starts failing as well...

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So retailers are selling the console for the glory and taking no cut at all are they?

Why even bother with these stories when the are clearly fabricated by arsehats trying to justify their utterly pointless bullshit analyst jobs?

A GCSE first year business studies student would be able to pull this utter crap to pieces with no knowledge of tech manufacturing.

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