Games By James Plafke Nov. 20, 2013 4:35 pm
It’s basically game industry tradition at this point to make a loss on console sales, but make the money back selling software — similar to the free razors Gillette sends you, knowing you’ll continue buying the refills. This time around, Sony is actually only taking a very small loss per each console sold, as it costs $381 to manufacture the hardware, while packaging, shipping, and other factors likely push the total cost per console over the $399 price tag. A portion of that $381 total manufacturing cost is the console’s custom-built AMD processor, which costs $100. That means AMD is making more than Sony on every PS4 sold.
Considering Sony is likely making a loss on each console once you factor in packaging, shipping, and advertising costs, AMD would obviously be making more per console sold regardless of the profit margin. However, just because the AMD chip costs $100 doesn’t mean the company is skimming that much off the PS4 sales.
AMD has stated in the past that typical margins hover around the 35%-40% range, and that margins on parts similar to the ones used in the PS4 yield a lower number, hovering in the mid-teens. So, the normal range of 35%-40% certainly isn’t $100 to begin with, and a “mid-teens” percentage would only be around $15. If Sony magically expended no extra costs beyond that $381 figure, the difference between Sony and AMD’s PS4 revenue would be negligible. However, due to the likely packaging, shipping, and marketing costs Sony dumps into the PS4, AMD is making more per console than Sony, but not*that much more.
Now read:*PS4 teardown reveals no adhesive, very easy hard drive access
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Considering Sony is likely making a loss on each console once you factor in packaging, shipping, and advertising costs, AMD would obviously be making more per console sold regardless of the profit margin. However, just because the AMD chip costs $100 doesn’t mean the company is skimming that much off the PS4 sales.
AMD has stated in the past that typical margins hover around the 35%-40% range, and that margins on parts similar to the ones used in the PS4 yield a lower number, hovering in the mid-teens. So, the normal range of 35%-40% certainly isn’t $100 to begin with, and a “mid-teens” percentage would only be around $15. If Sony magically expended no extra costs beyond that $381 figure, the difference between Sony and AMD’s PS4 revenue would be negligible. However, due to the likely packaging, shipping, and marketing costs Sony dumps into the PS4, AMD is making more per console than Sony, but not*that much more.
Now read:*PS4 teardown reveals no adhesive, very easy hard drive access
More...
