Sony Corp.'s PlayStation 4 gaming console carries costs less to manufacture than its $399 retail price, paving the way for the company to break even or turn a profit on each console sale in the near future, according to a teardown analysis by IHS teardown services.
PlayStation 4 carries a bill of materials (BOM) cost of $372, plus an additional manufacturing cost of $9, amounting to a total of $381, or $18 less than the retail price, according to IHS. When other expenses are tallied, Sony initially will still take a loss on each console sold. But the relatively low BOM of the PlayStation 4 will allow the company to break even or attain profitability in the future as the hardware costs undergo normal declines, IHS said.
At the time of Sony's PlayStation 3 launch in 2006, the company was famously taking a loss of more than $200 on each unit sold. In the seven years since, Sony has offered various revisions of the PlayStation 3, many of which were also sold at a loss, according to IHS.
"Although Sony brought the PlayStation 3's costs down significantly during its lifetime, the company's intent was never to make money on the hardware, but rather to profit through sales of games and content,"
Said Andrew Rassweiler, senior director of cost benchmarking services for IHS.
This time around, however, Sony has significantly shortened the path to the hardware break-even point or even profitability with a cost-conscious design, Rassweiler said. But despite the emphasis on cost, Sony's PlayStation 4 delivers major upgrades, with a processor and memory subsystem that pushes the envelope in terms of performance and product design, Rassweiler said.
"The PlayStation 4 keeps a lid on costs by focusing all the additional expense on the processor and memory—and reducing outlays for the optical drive, the hard disk drive (HDD) and other subsystems," Rassweiler said.
The PlayStation 4 is more economical for Sony than even the revision of the PlayStation 3 torn down by IHS, which was shipped in 2009, a model dubbed the CECH-2001A. That version of the PlayStation 3 carried a $336 BOM and manufacturing cost compared to a $299 sales price, according to IHS.
The most expensive subsystems in the PlayStation 4 are the core processor and the associated graphic DRAM, which together entail $188—representing slightly more than 50 percent of the BOM of the entire console, IHS said. In the fourth-generation PlayStation 3, these two subsystems accounted for only 29 percent of the total cost, IHS said.
A major change in the PlayStation 4 is the inclusion of an AMD chip that integrates the central processing unit and graphics processing unit, replacing what had been two discrete devices in the PlayStation 3. Sony announced in February that it would go with the AMD chip, replacing the CELL processor that Sony famously developed along with IBM and Toshiba. The high cost of this development was cited as one of the major reasons that Sony couldn't turn a profit on the PlayStation 3 consoles.
The AMD accelerated processing unit (APU) included in PlayStation 4 includes an eight-core Jaguar CPU and a Radeon GPU, IHS said. The APU, integrated in 28-nm process technology, costs $100, IHS estimates, compared to an $83.55 combined total for the CELL processor and Nvida GPU that were in the PlayStation 3 that IHS analyzed in 2009.
"Sony clearly has made the decision to focus on balancing the brains and economics of the console, with the processor and memory dominating both the design and the BOM," said Jordan Selburn, senior principal analyst for consumer platforms at IHS. "This processor is a monster, with the surface area of the chip amounting to about 350 square millimeters."
The size of the AMD chip is three times larger than any other 28-nm chip that has been examined by the IHS Teardown Analysis service. Despite its size, the AMD chip comes at a price point attractive to mainstream consumers while delivering a very high level of performance, Selburn said. "Future versions, manufactured with even more advanced semiconductor processing technology, will further enhance both cost and performance," he said.
Sony also dramatically increased spending on memory in the PlayStation 4, adopting advanced graphics DRAM (GDRAM) GDDR5. The DRAM included in PlayStation 4 costs an estimated $88, up from just $9.80 for the PlayStation 3 torn down in 2009, IHS said. The $9.80 total does not include the DRAM that was mounted directly to the Nvidia processor in the PlayStation 3.
According to Mike Howard, senior principal analyst for DRAM and memory at IHS, GDRAM DDR5 memory has much higher bandwidth than the DDR3 used in Microsoft's Xbox One. "It also works better with parallel computing and is designed specifically to enhance graphics performance," Howard said. "Because of its cutting-edge status, GDRAM GDDR5 is more expensive than DDR3, which is used in high volume in products including PCs and older game consoles."
But while Sony increased spending on the processor and memory, it offset these cost increases in other subsystems, IHS said. For example, the optical drive in the PlayStation 4 costs only $28, compared to $66 in the 2009 version of the PlayStation 3, IHS said. With the optical drive mechanism remaining largely unchanged since 2009, Sony was able to capitalize on the dramatic price erosion in this product during the past four years, IHS said.
Sony trimmed another $10 from the BOM by using a more integrated design overall for the PlayStation 4, according to IHS The design allowed Sony to reduce the number of small-sized integrated circuits, discrete semiconductors and passive components. The total cost of these devices amounted to $40 in the PlayStation 4, down from $50.23 in the 2009 version of the PlayStation 3, IHS said.
Sony cut another $5 from the BOM in the mechanical portion of the design, including enclosures—like plastics and metals--and in the electro-mechanical content, such as printed circuit boards, connectors and wire harnesses, IHS.
While the HDD used in the PlayStation 4 costs $1 less than the HDD used in the fourth-generation PlayStation 3, it features far more capacity—500 gigabytes compared with 120 gigabytes, IHS said. This cost reduction reflects the major decline in HDD costs during the past four years, IHS said.
- Electronics360 Teardowns Home
- Exclusive Video Teardown: Apple iPad Air
- Exclusive Video Teardown: Apple iPhone 5s and 5c
- Teardown: Fitbit Flex
- Ford SYNC (2nd generation) Teardown
- Video Teardown: Inside a Smart Electricity Meter