Based on that headline, you might be tempted to jump to the conclusion that Sony is earning a $18 profit on every PS4 console it sells, but that’s not entirely true. Based on a new report published by All Things D based on data it received from the IHS research firm, it costs Sony about $381 to produce a PlayStation 4.
This factors in all the parts involved and possibly some of the labour, but it surely doesn’t factor in the costs for R&D, advertising, marketing, overhead and the rest of it. The bulk of cost goes into the $100 microprocessor from AMD, plus the $88 for the 16 individual memory chips. That makes up about half the cost. You also get a $37 hard drive from Seagate and a $28 optical drive, plus chips from Marvell and Skyworks. The controller, including its Qualcomm-sourced Bluetooth chip, Wolfson Microelectronics audio chip and Bosch motion sensor chip, costs a total of $18 to build.
To put things in perspective, the PlayStation 3 launched at quite a monumental loss for Sony. Even though the PS3 was listed at $599 when it was first released, it actually contained something in the neighborhood of $805 in parts. Even though Sony was able to reduce its costs to $336 by the end of 2009, it also lowered the price to $299. By contrast, the iPad Air costs $274 to build and sells for $499.
The rationale is that Sony will make money on the console in the long run via game titles, just as it did with previous PlayStation outings.