Microsoft isn’t sticking it to gamers by charging more for its Xbox One console than Sony does for PS4 – it really costs that much more for the parts.
The more expensive Xbox One’s price is $471 (about £291, AU$516) at cost, according to the teardown analysts at iHS iSuppli.
Its bill of materials amounts to $457 (about £282, AU$501) and manufacturing is estimated to be $14 (about £9, AU$15).
That doesn’t necessarily mean Microsoft is walking away with a profit on each console being sold for $499 (£429, AU$599), as retailers and distributors often take a cut.
"Just like the PlayStation 4, Microsoft initially will take a loss on each Xbox One sold when other expenses are added into the equation," noted iSuppli in a press release. They’re likely to make up for the loss in game sales.
Why PS4 is cheaper than Xbox One
PS4 is in a very similar profit-loss situation, but it’s operating with a less expensive set of parts.
Sony’s at cost price for its next-generation console is said to be $381 (about £235, AU$417),
The PS4 components cost $372 (about £230, AU$408) and manufacturing is somewhere in the ballpark of $9 (about £6, AU$10).
We’re looking at you Kinect, looking at us
The biggest difference comes down to Microsoft’s decision to include the Kinect camera sensor, which is estimated to cost the company $75 (about £46, AU$82) for every console sold.
Sony opted not to include the PS4 Camera, which is a savings in the immediate term. But this may not help its use of motion-controlled games if a small fraction of the userbase is be without the accessory. The jury is still out on this controversial decision.
Another empty cost field in Sony’s favor is the power supply. The PS4 contains a less expensive power supply inside the console.
Microsoft opted for an external $25 (about £15, AU$27) brick. The jury is not still out on this annoying decision.
Most of the other part prices are a draw, with Xbox One having a more expensive CPU and GPU combo, while PS4 trades places with higher-priced DRAM.
The good news is that these expenses will decrease over time. Xbox One and PS4 are likely to see price drops in the future even though both companies aren’t making a sizable profit right now like most consumers tend to think.
- Read: Apple’s to use Xbox 360 Kinect developer PrimeSense 3D to boost indoor mapping, rather than iTV set?