Xbox One Teardown By IHS Reveals The Console’s Manfacturing Cost


Some days after the launch of Sony’s PlayStation 4 console, a research done by IHS revealed the manufacturing cost of the console and according to it, Sony is taking a loss with selling each PlayStation 4 unit. IHS has now also revealed the manufacturing cost of Microsoft latest console in the Xbox One teardown, according to the hardware teardown, Microsoft also has almost no space for profit in the console's price.

Xbox One Teardown Reveals The Console’s Manufacturing Cost Is $90 More Than The PlayStation 4

Sony and Microsoft released their latest significant gaming consoles this month pricing the PlayStation 4 at $399 and Xbox One at $499. A lot of people were questioning about why the Xbox One costs $100 more than the PlayStation 4 and the answer is clearly given below.

A research firm, IHS dissected the PlayStation 4 recently revealing that Sony pays $381 for the manufacturing of one PlayStation 4 console with the controller. Counting the packaging and other expenditures shows that Sony is taking loss on each PlayStation 4 console, now Xbox One teardown shows Microsoft is in a same situation.

To keep people informed about both sides, IHS has revealed a detailed Xbox One teardown that shows why the console costs $100 more than the PlayStation 4. Xbox One teardown shows that it take Microsoft $471 to build an Xbox One console along with its controller and the Kinect sensor. Just like Sony, Microsoft also does not seem like making an ample amount of profit with the Xbox One as it is manufactured for only $28 less than its retail price.

IHS revealed the Xbox One teardown details exclusively to AllThingsD. The research shows that all of the Xbox One’s hardware cost $457 to produce and $14 to assemble setting the console’s manufacturing price at $471. One of the main reasons of the larger manufacturing cost is the Kinect sensor that comes bundled with the Xbox One console as an add-on accessory. PlayStation 4 console package does not include any such kind of accessory. Kinect alone costs $75 to build and this is why Xbox One is $100 expensive than the PlayStation 4.

According to Andrew Rassweiler, an analyst at IHS who also led the PlayStation 4 teardown team, the most expensive piece of hardware found inside the Xbox One is the AMD chip, a combination of CPU and GPU. The Xbox One AMD processor chip costs $110, $10 more than the PlayStation 4 custom-built AMD processor. But both the processors are very powerful says Andrew: “They're both very powerful chips, you might call them a gaming console on a chip."

PlayStation 4 has high-end GDDR5 memory chips compared to the older and quite commonly used DDR3 memory chip. According to Xbox One teardown, Microsoft pays less for the DDR3 memory of the Xbox One. The memory comes from Sk Hynix and adds around $60 to the manufacturing cost, it costs $28 less than the $88 PlayStation 4 GDDR5 memory.

Another thing that increased the manufacturing cost is the external power supply of the Xbox One that costs around $25 to produce. The controller is manufactured for $15, the Xbox One console package includes one controller, additional unit can be separately bought for $60, this gives some good profit to Microsoft. Xbox One bundle also includes a headset that is produced for $10.

Microsoft, similar to Sony, is also apparently securing no profit in selling the Xbox One. The console’s manufacturing price is just $28 less than the retail price. Microsoft would also have to count on games, software and console accessories for profit until it finds a way to reduce the manufacturing cost of the Xbox One.