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Xbox One Only Makes Microsoft $29 on Each Unit Sold, Cost $90 More to Manufacture Than PS4

Xbox One Only Makes Microsoft $29 on Each Unit Sold, Cost $90 More to Manufacture Than PS4

Xbox One has been revealed to cost $471 to manufacture, which is $90 more than the PS4 cost to create.

The $471 price tag is undoubtedly the reason why the console cost $499.99, any cheaper and they would obviously be losing money, and with those margins they are not making too much off of their consoles.

The pricey feature the One has that the PS4 does not is the inclusion of the Kinect motion sensor. Kinect cost $75 to make, which is what raises the overall price. However, according to IGN, the most expensive component of the until is the AMD graphics processor, which is $110.

IHS analyst Andrew Rassweiler breaks down the console components as: console ($332), Kinect ($75), controller ($15), power brick ($25), headset ($10), and production ($14).

The PS4 cost $381 to make, which nets them $18 on every console, according to IHS research firm. The biggest price points in the console now are the memory chips, with one selling for $100 and the others equaling up to $88.

"This chip is just gigantic," IHS analyst Andrew Rassweiler told Gamespot. "It's almost three times as big as the next biggest chip we've seen."

According to Forbes the old video game model was for companies to sell their consoles at a loss, and the money would be made up in licensing and first party game sales. The PS3 reportedly sold at almost a loss of $300 a console until they released the slim, which lowered the cost to $31.27.

The PS4 and Xbox One will not likely see any price cuts until 2015, a new report on the two consoles predicted.

The huge success of the two launches put Sony and Microsoft in the position to do as they please because at the current prices, people are still purchasing the consoles. PS4 sold a million in the U.S. in its first 24 hours alone. Xbox One sold a million in 13 markets in its first day.

"You would certainly cut the price of hardware because there is a demand issue," said Colin Sebastian, an interactive media analyst with Baird Research, told CNET. "GameStop has 30 million PowerUp Rewards members who are active gamers, and we're only predicting sales of 6 million total units."

The "demand issues" he is referring to here is "lack of sales," something the two consoles are not experiencing so far. The PS3 sold poorly in its first year because its $599 price tag was too much for people. Once the console price was lowered it began selling just about as well as the Xbox 360, however, it was too late to catch up. Microsoft took the last-generation console wars as far as popularity.

Matthews said that this console launch of the PS4 and Xbox One are among the most successful launches of all time, and although both consoles have had hitches with faulty consoles, they are reconciling the problems efficiently.

The Xbox One was released on November 22 and the PS4 on No. 15.

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