The Teardown Analysis Service division of research and analytics firm IHS reports that the bill of materials (BOM) for the PlayStation 4 amounts to $372. When the manufacturing expense is added in, the cost increases to $381. This comes in $18 lower than the $399 retail price of the console.
When other expenses are tallied, Sony will initially still take a loss on each console sold, says IHS, but the relatively low BOM of the PS4 will allow the company to break even or attain profitability in the future as the hardware costs undergo a normal decline.
IHS notes that with the PlayStation 3, launched in 2006, Sony was taking a big loss on each unit sold.
“The BOM costs for most of the different versions of the [PS3] console were in excess of the retail prices, in some cases by more than $100. Although Sony brought the PS3’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.
This time, Sony is on a greatly shortened path to the hardware break-even point, or even profitability, with its cost-conscious PS4 design,” said Andrew Rassweiler, senior director, cost benchmarking services for IHS.
The PS4 is more economical for Sony than the revision of the PS3 (model CECH-2001A) which was shipped in 2009 and torn down by IHS. That version of the PS3 carried a $336 BOM and manufacturing cost compared to a $299 sales price.
The table below shows the preliminary BOM and manufacturing cost estimate of the PS4. IHS notes that the teardown assessment is preliminary in nature, accounts only for hardware and manufacturing costs, and does not include other expenses such as software, licensing, royalties or other expenditures.
Expensive processing power
The costliest subsystems in the PS4 are the core processor and the associated graphic dynamic random access memory (GDRAM), which together total $188 – representing slightly more than 50 percent of the BOM of the entire console. This compares to only 29 percent for the fourth-generation PS3.
In the PS4, Sony has integrated two functions that were previously two discrete integrated circuits (ICs) in the PS3, reports IHS: the core central processing unit (CPU) and graphics processing unit (GPU).
The processor uses 28-nanometer semiconductor manufacturing processes, and combines both the CPU and GPU into a single unit. The AMD processor includes an eight-core Jaguar CPU and a Radeon GPU.
This processor costs $100.00, IHS estimates, compared to an $83.55 combined total for the two prior, equivalent integrated circuits from IBM and Nvidia that were used in the PS3 (CECH-2001A), which IHS analyzed in 2009.
“This processor is a monster, with the surface area of the chip amounting to about 350 square millimeters. That is three times larger than any other chip manufactured using equivalent-process technology that has been examined by the IHS Teardown Analysis service. Future versions, manufactured with even more advanced semiconductor processing technology, will further enhance both cost and performance,” said Jordan Selburn, senior principal analyst for consumer platforms at IHS.
Memory costs more
IHS remarked on the cost increase for the GDRAM – at an estimated $88.00, that’s up from $9.80 for the fourth-generation PS3 (CECH-2001A). Note that the $9.80 total does not include the DRAM that was mounted directly to the Nvidia processor in the PS3 that IHS analyzed in 2009.
This cost increase is due to the PS4’s adoption of advanced Graphics DRAM (GDRAM) GDDR5.
“GDRAM DDR5 memory has much higher bandwidth than the DDR3 used in the Xbox One. It also works better with parallel computing and is designed specifically to enhance graphics performance. 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,” said Mike Howard, senior principal analyst, DRAM & memory, for IHS.
The biggest area of cost reduction is in the optical drive, at only $28, compared to $66 for the PS3 (CECH-2001A).
Sony trimmed the number of small-sized integrated circuits, discrete semiconductors, and passive components in the PS4. The total cost of these devices amounted to $40.00 in the PS4, down from $50.23 in the PS3 (CECH-2001A).
Another $5 reduction was achieved in the mechanical portion of the design, including enclosures (plastics and metals) and in the electro-mechanical content, such as printed circuit boards, connectors, and wire harnesses.
The hard disk drive in the PS4 is $1 cheaper than the one in the PS3 (CECH-2001A), despite a jump in capacity to 500GB up from 120GB.