The PS4, separated into its many parts.
The PlayStation 4, which retails for $399 (if you can find one), costs just barely under that to make: $381, according to a teardown analysis by IHS. That means there's little room for Sony to profit on the console — but they rarely ever have, and never made a dime on PS3s.
It may seem strange at first that a device that's so expensive to make doesn't have a higher price at retail. Apple's new iPad Air, for instance, costs just $274 to make — and it sells for $499 to start, with profits piling up as buyers add expensive storage.
But game consoles are different. The most important thing is for the PS4 to make it into as many living rooms as possible, so that developers will develop blockbuster million-seller games — of which Sony takes a cut. So the company sells the console for as little as it can afford to, on the chance that it'll make that money up later.
The PS3, in fact, never itself produced a profit for Sony. When it launched, even at the highly criticized $599 price point, it cost over $800 to build. Even the latest slim, updated versions always sold at a loss. It's a risky strategy, but as anyone who has ever bought blades for a razor can tell you, it can really pay off.
Most of the cost of this more budget-friendly PS4 can be found in its custom processor, graphics chip and 8 GB of very fast RAM. Together, these items account for about half the cost of the entire console. Everything else, from power supply to network hardware, costs largely the same as what you'd find in a PS3 — with the exception of the optical drive, which is significantly cheaper.
The high-tech new Dual Shock 4 controller (included in the cost of the console) is just $18 to make, which means Sony will be selling those for a nice profit, and of course replacement cables and other little items are marked up enormously.
Overall, it's a fairly thrifty design, owed largely to the close resemblance to desktop PCs; unusual components like the PS3's much-vaunted Cell processor tend to be both expensive to produce and a burden for developers.
More information on the teardown and some other interesting graphics can be found at the IHS press release.
Devin Coldewey is a contributing writer for NBC News Digital. His personal website is coldewey.cc.
First published November 19 2013, 4:13 PM