The PS5's Manufacturing Cost Is Enormous

Bloomberg: PS5 manufacturing costs pushed to $450 per unit, Sony facing pricing difficulty due to competition and scarce parts

According to "people with knowledge of the matter" the console's manufacturing cost is now at around $450 per unit. Sony would wait for the announcement of the price of the Xbox Series X to set the price of its console.

A report in Bloomberg suggests that the rising costs of DRAM and NAND flash memory parts - crucial for the smooth functioning of the console's onboard processor, and also in high demand for new smartphone releases - makes balancing the books for the PS5 retail price hard, and that Sony may even be putting off its pricing decision to figure out what cost to put on consumers. For example, the PS4 went for a retail price of $399 but was estimated to cost around $381 to manufacture. Most of the other components for the console have been locked down, the sources said.

"If Sony prices above that, it would likely be to balance a need to offset higher materials cost, against risk to demand".

According to Bloomberg, the main problem comes from the supply of DRAM and NAND flash memory. Let's not forget that the PlayStation Network is worth an absolute fortune - it's entirely possible that Sony is willing to sell the PS5 at a loss just so that it can get the system into people's homes and continue to generate huge profit primarily through software sales and subscriptions.

Sony's Chief Executive Officer Kenichiro Yoshida has said the business should be judged by the number of active users, not the number of hardware units sold.

Bloomberg: PS5 manufacturing costs pushed to $450 per unit, Sony facing pricing difficulty due to competition and scarce parts
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The ongoing coronavirus outbreak has had no impact so far on preparations for PlayStation 5 production, they said. Such a device is the Galaxy S20, which ships with at least 12GB of RAM and 128GB of storage.

Separately, Sony plans to release a new version of the PlayStation VR virtual-reality headset, tentatively scheduled after the PlayStation 5 goes on sale, the people said. This includes the cooling system, which usually doesn't cost much but Sony made a decision to spend more in order to make sure that heat dissipation won't be an issue for the new console.

The outlet also reports that numerous games launched for PlayStation 5 will also be available to play on PlayStation 4.

There is reportedly pressure from Sony Corporation CFO Hiroki Totoki to provide more transparency and information in the lead-up to PlayStation 5's launch this holiday season, which has led to some internal distress.



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