Sony is almost breaking even on PS4 production after abandoning use of custom components

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Sony is almost breaking even on PS4 production after abandoning use of custom co

On the basis of its analysis of Sony's newly-launched next-generation PlayStation 4 (PS4) gaming console, research firm IHS Inc. has revealed that Sony is nearly breaking even on the production of the console, after doing away with some of the custom components which led to losses on the previous PS models.

In a recent e-mailed statement, IHS said that the cost of components for each unit of PS4 is $372; while the `per unit' cost of manufacturing the console is $9. As such, the total expenses involved in producing each unit of PS4 come to $381; which is only $18 less than the console's US retail price-tag of $399.

According to the IHS analysis, if the other expenses involved in bringing the console to the market - including costs involved in software, licensing, royalties and other outlays - are taken into account, Sony will still take an initial loss on each unit of PS4 sold.

With lower production costs apparently being a significant part of Sony's game plan for the PS4, Andrew House - the head of Sony's PlayStation unit - has stated that the company's decision to use readily available components on the PS4, rather than custom chips and other components, was part of its efforts to lower costs and ensure ample supplies.

Meanwhile, projecting that Sony's hardware costs for PS4 will "undergo normal declines," IHS said that relatively low material costs "will allow the company to break even or attain profitability in the future."


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