Xbox One Costs Microsoft $471 to Manufacture

Published 9 months ago by

Xbox One Manufacture Cost

Earlier this month, the analysis firm of IHS revealed that given the parts contained within the PS4, the console likely cost Sony about $381 to manufacture. Factoring in packaging and other expenditures, that meant Sony was taking a loss on each console.

Not to be outdone, IHS has now gotten their hands on Microsoft’s Xbox One, which released this past Friday in North America and several other territories, and provided a detail breakdown of that console. And like Sony is with the PS4, it’s safe to reason Microsoft is taking a loss on their console as well.

According to IHS, the Xbox One likely costs Microsoft about $471 to manufacture, just $28 less than the console’s retail price. The firm reasons that raw parts cost Microsoft $457 to procure, and the console then costs about $14 to assemble.

It’s important to mention, however, that the Xbox One also comes with the Kinect camera, which IHS figures to account for around $75 of the Xbox One’s total manufacturing cost. The Kinect camera is a major reason the Xbox One retails for $100 more than the PS4.

Xbox One Part Breakdown

As far as raw parts go, the Xbox One’s AMD processor reportedly costs about $110, which is about $10 more than the PS4′s custom-built AMD processor. On the flip side, the Xbox One’s DDR3 RAM only costs about $60. By comparison, the PS4′s GDDR5 memory costs about $88. So, in the end Sony is paying a little bit more, and getting what some testers reason is a slightly more powerful machine.

As with the PS4, Microsoft will likely start to turn a profit on each console sold once a single game is purchased. And if that title is a digital game, then the manufacturing cost of the console is even further offset.

Similarly, considering most of the Xbox One’s parts are much less specialized, there is plenty of room for the console’s manufacturing price to come down. Whether that is in a year’s time or more is unclear, but one publisher thinks a price cut could be sooner rather than later.

With the Xbox One having moved 1 million units in its first 24 hours, Microsoft is likely pretty satisfied with the launch of their new next-gen console. Yet, this detailed breakdown shows that winning the console war with a competitive price point comes at its own price. Both Sony and Microsoft are cutting it close with their costs, and while that’s a give and take for them, it’s good for consumers.

Now that you know how much the Kinect costs to manufacture, are you hopeful Microsoft might offer an Xbox One SKU without the camera? Do you think it’s smart of Sony and Microsoft to create price points barely above their manufacturing costs?

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Source: All Things D

TAGS: Kinect, Microsoft, Xbox One

9 Comments

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  1. Thats only because they actually cost $235.50 to create one but have to send you a second one when the first one stops working.

    • Fanboys don’t ya just love em…. Meanwhile Sony has the blue line of death but we wont speak about that.

      • That’s 1% of the consoles and that was an issue created by the people who shipped the PS4s, not Sony. Although, having a broken disc drive is Microsofts fault.

        • I’m sorry, I am missing your logic there. So there is a technical fault with one machine and it is the shipping companies fault but a broken part and it is the manufacturers fault!??

          I will be blunt, you sound like a major fanboy who can’t take a realistic look at the situation.

          Technical problems tend to be caused by dodgy parts, broken parts tend to be a shipping problems. Please try to look at things from an outside point of view before you open your mouth.

          • well there is an easy fix for the BLOD, there isnt an easy fix for a broken disc drive, you should check IGN sometime before you open YOUR mouth

          • rgr that doesn’t mean its ones fault and not the others when there is a fix. Your logic is horrible so if i get a product but i can fix it its someones fault but when i cant fix it, its someone elses fault hop off the boy toy train BRO

  2. I love how ppl say blue line of death isnt sonys fault. The retailers just added that for extra fun right? Talk about logic.

  3. System fanboys on either side always tend to come off sounding inane. Everybody screeching about how they’re right and everybody else is wrong and theirs is the only truly educated opinion that matters. Always the same tiresome refrain, PC is the best, no PS4 is better, no Xbox One is the end all be all system. People arguing about stats and broken/bricked systems that become irrelevant about three weeks after the new console smell wears off. It seems funny to me that there aren’t really any fanboy/girl debates about the only aspect of the gaming industry that really matters, the developers. How come no one ever argues that Epic produces better games than say Rockstar, or 343 vs Bungie. It’s these people who set the pace for the gaming industry, as they control the design, gameplay and story for everything we experience making the console merely a means to that end. The system only matters for the gamer as a personal preference, if you like the xbox controller then get that one, if you like open gaming potential get a pc, but that doesn’t make any one better over the other. You take the games out of the systems and you’re left with an overpriced device with all the capabilities of your average smart TV. So maybe we should spend less time with this system pissing contest and more time holding the developers to task for a more often than not subpar gaming experience.

  4. Xbone is gonna get dominated this Generation. Can’t wait!!!

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