Sony Computer Entertainment Inc.’s previous-generation PlayStation 3 video game console was sold at a considerable loss early in its lifecycle because of very high costs of IBM Cell processor, Nvidia RSX graphics engine as well as Blu-ray disc drive, which resulted in $840 manufacturing costs. With the PlayStation 4 the company changed its design approach and adopted loads of off-the-shelf components. As a result, manufacturing cost of the PS4 is slightly lower than its retail price.
PS4: Only $381 to Make
According to preliminary results from the teardown analysis service at IHS, the bill of materials (BOM) for the PlayStation 4 amounts to $372. When the manufacturing expense is added in, the cost increases to $381. This comes in $18 lower than the $399 retail price of the console. When other expenses are tallied, Sony initially will still take a loss on each console sold. But the relatively low BOM of the PlayStation 4 will allow the company to break even or attain profitability in the future as the hardware costs undergo normal declines. Keeping in mind the fact that the average game attach rate to the console is three titles, it is likely that Sony does not make a lot of losses on the PS4 since it receives profits per every game.
The PlayStation 4 is more economical for Sony than even the revision of the PlayStation 3 torn down by IHS, which was shipped in 2009, a model dubbed the CECH-2001A. That version of the PlayStation 3 carried a $336 BOM and manufacturing cost compared to a $299 sales price.
The teardown assessment is preliminary in nature, accounts only for hardware and manufacturing costs, and does not include other expenses such as software, licensing, royalties or other expenditures.
“This time, Sony is on a greatly shortened path to the hardware break-even point, or even profitability, with its cost-conscious PlayStation 4 design. The company is pulling off this feat, despite offering a brand-new design that once again includes avant-garde components that yield superfast performance. The PlayStation 4 keeps a lid on costs by focusing all the additional expense on the processor and memory—and reducing outlays for the optical drive, the hard disk drive (HDD) and other subsystems,” said Andrew Rassweiler, senior director, cost benchmarking services for IHS.
PlayStation 4 disassembled. Photo by iFixit.com
Big Chip = Big Savings
The costliest subsystems in the PlayStation 4 are the core processor and the associated graphic dynamic random access memory (DRAM), which together entail $188 – representing slightly more than 50% of the BOM of the entire console. This compares to only 29% for the fourth-generation PlayStation 3. For the PlayStation 4, Sony has integrated two functions – the core central processing unit (CPU) and graphics processing unit (GPU) – that were previously two discrete ICs.
Sony CXD90026G system-on-chip, which was designed by AMD, is manufactured under AMD supervision by TSMC in Taiwan and then packed and tested at AMD facilities in Malaysia. Photo by iFixit.com
“Sony clearly has made the decision to focus on balancing the brains and economics of the console, with the processor and memory dominating both the design and the BOM. This processor is a monster, with the surface area of the chip amounting to about 350mm2. That is three times larger than any other chip manufactured using equivalent-process technology that has been examined by the IHS teardown analysis service. Despite the remarkable silicon acreage of this device, it comes at a price point attractive to mainstream consumers while delivering a very high level of performance. Future versions, manufactured with even more advanced semiconductor processing technology, will further enhance both cost and performance,” said Jordan Selburn, senior principal analyst for consumer platforms at IHS.
The processor exhibits a high degree of integration, using advanced 28nm semiconductor manufacturing, and combining both the CPU and GPU into a single device. The Advanced Micro Devices processor includes an eight-core Jaguar CPU and a Radeon HD GPU with GCN architecture with 1152 stream processors. This processor costs $100.00, IHS estimates. While the price seems to be high, it is considerably lower than the amount of money Sony paid for the key PS3 logic back in 2006. Sony initially purchased Cell processor for $89 and was charged $129 for Nvidia RSX graphics engine inside the PS3.
The cost increase for the DRAM is even more remarkable, at an estimated $88.00, up from just $9.80 for the fourth-generation PlayStation 3, i.e. the CECH-2001A. Note that the $9.80 total does not include the DRAM that was mounted directly to the Nvidia processor in the PlayStation 3 that IHS analyzed in 2009. This cost increase is due to the PlayStation 4’s adoption of 8GB of advanced GDDR5. On the other hand, 256MB of XDR memory initially cost Sony about $48.
PlayStation 4 disassembled. Photo by iFixit.com
“GDDR5 memory has much higher bandwidth than the DDR3 used in the Xbox One. It also works better with parallel computing and is designed specifically to enhance graphics performance. Because of its cutting-edge status, GDRAM GDDR5 is more expensive than DDR3, which is used in high volume in products including PCs and older game consoles,” said Mike Howard, senior principal analyst of DRAM and memory at IHS.
Major and Minor Components Get More Affordable
Despite of relatively high costs for the processor and memory, other components of the console cost equally or lower compared to current-generation PlayStation 3 and are clearly more affordable compared to components of the original PS3 from 2006.
The biggest area of cost reduction is in the optical drive, at only $28, compared to $66 for the CECH-2001A PlayStation 3. With the optical drive mechanism remaining largely unchanged since 2009, Sony was able to capitalize on the dramatic price erosion in this product during the past four years, according to IHS. The company paid whopping $125 for a BD drive in 2006.
Sony trimmed another $10 from the BOM by using a more integrated design overall for the PlayStation 4. The design allowed Sony to reduce the number of small-sized integrated circuits, discrete semiconductors and passive components. The total cost of these devices amounted to $40.00 in the PlayStation 4, down from $50.23 in the CECH-2001A PlayStation 3.
Another $5 reduction was achieved in the mechanical portion of the design, including enclosures – like plastics and metals – and in the electro-mechanical content, such as printed circuit boards, connectors and wire harnesses.
The hard disk drive in the PlayStation 4 is $1 cheaper than the one in the CECH-2001A PlayStation 3, despite a major jump in capacity to 500 gigabytes (GB), up from 120 GB. This cost reduction reflected the major decline in HDD costs during the past four years.