Next-Generation Game Consoles to Cost $349 - $399 – Analyst

Sony PlayStation 4 to Cost Less Than Xbox One

by Anton Shilov
06/03/2013 | 10:51 PM

Despite of rumours regarding hefty price tags that will be carried by next-generation video game consoles from Microsoft Corp. and Sony Corp., market analysts believe that the two systems will end up in $349 - $399 price-range. Although Sony’s PlayStation 4 is more powerful from many points of view, it will be more affordable than the Xbox One, which has richer functionality.

 

“For the Xbox One, if there are in fact no meaningful subsidies, we believe a starting price of $399 makes sense given that the Xbox 360 Pro debuted at that price point in November 2005. Our estimate of the bill of materials for the Xbox One (based upon speculation regarding many of the specs) is around $325, suggesting that Microsoft could make a modest profit at the $399 price point. For the PS4, we remain confident that the new console will have a lower initial MSRP than the PS3, which had a lofty starting price of $599 […]. We expect the PS4 to debut at $349, as our estimate of the bill of materials is $275,” said Michael Pachter, an analyst with Wedbush Equity Research, in a research note.

Previously other analysts implied that Microsoft Xbox One would cost around $500 and will not be as cheap as expected given vast functionality of the machine. Nothing particular is known about the price of the PlayStation 4, but it should be generally similar due to the fact that the systems are based on comparable chips.

Both Microsoft’s third-generation Xbox as well as Sony’s PlayStation 4 are based on semi-custom AMD Fusion system-on-chips with eight Jaguar general-purpose x86 cores, AMD Radeon HD GCN architecture-derived graphics processors and other special-purpose hardware units. Both consoles will have hard disk drives as well as Blu-ray disc drives.

“In our view, the Xbox One is the more likely of the two new consoles to be subsidized due to its functionality. We believe the ability to watch live TV from a cable, telco, or satellite set-top box through Xbox One could entice an MSO to drive subscriptions through a subsidized box in exchange for a multi-year contract. The “always connected” requirement for the Xbox One likely means that a broadband connection will be required, suggesting to us that ISPs may have an incentive to offer a subsidy as well. In addition, Microsoft could conceivably subsidize the Xbox One through prepaid Xbox Live Gold subscriptions (as it has done on a limited basis in the past) or premium Skype functionality as well. Similarly, Sony could subsidize the PS4 through prepaid PlayStation Network subscriptions, but unlike Microsoft, it does not have a history of doing so. We believe that many of the multimedia functions demonstrated at the Xbox One reveal event could be emulated by Sony in the next year or so through a firmware update,” added Mr. Pachter.