The Xbox One costs about $90 more than the...
The Xbox One costs about $90 more than the PS4 to make, according to the preliminary results of a teardown of Microsoft’s new console by IHS. The combined hardware and manufacturing cost of the Xbox One is $471, “suggesting that…
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Microsoft is subsidizing the cost” of its console at launch, IHS said Tuesday. The Xbox One has a bill of materials (BOM) of $457, said IHS. Manufacturing is estimated at $14, so the console’s $471 total cost is only $28 less than its retail price of $499, said IHS. That’s similar to the PS4, which costs only $18 less than its $399 retail price (CED Nov 21 p3), said IHS. Microsoft may be “more willing to take a loss on hardware sales” with the Xbox One than it has for its prior-generation products, said IHS. The Xbox One is “designed to serve as a beachhead in the home for Microsoft, with the console’s capability to interact with -- and interface to -- other devices,” including TVs, set-top boxes, smartphones and tablets, said Steve Mather, senior principal analyst, in a news release. The Xbox One’s “core architecture is very similar” to the PS4, with most of the functionality of the two systems “residing in highly integrated system-on-chip (SOC) devices supplied” by Advanced Micro Devices (AMD), said IHS. The largest factor increasing the hardware cost of the Xbox One compared to the PS4 is Microsoft’s inclusion of the enhanced Kinect system as a standard feature, said IHS. The Kinect adds $75 to the Xbox One’s BOM and manufacturing cost, it estimated. “Preliminary modeling” from IHS suggests the AMD chip in the Xbox One should cost about 10 percent more than the device the chip maker sells to Sony for the PS4, said IHS, or $110, compared with $100 for the PS4. Another “major cost driver” of the Xbox One compared with the PS4 is the optical drive, said IHS. Microsoft uses a Blu-ray drive made by Lite-On, compared with what IHS believes to be an in-house, Sony-made device in the PS4, said IHS. The Lite-On drive accounts for $32 of the Xbox One BOM, said IHS. The power supply on the Xbox One also is a $25 cost for the Xbox One, it said. Unlike the PS4, which features an internal power supply, Microsoft “adds bulk and cost by employing an external power supply” for the Xbox One, said IHS. Microsoft didn’t immediately comment.