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Xbox One vs. PS4: Microsoft More Profit Per Console

By   11.22.2013 0

OTTAWA, — Microsoft comes out punching with a significant upgrade to the Xbox franchise console and a true competitor to Sony’s PS4 while delivering per-unit profits.

TechInsights Teardown costing shows both companies can profit from sales of their gaming consoles this holiday season. In fact, they used many similar parts to optimize their investment in the next generation of gaming consoles. Though AMD came out as a big winner in the APU (integrated CPU and GPU), there are choice design differences around both the processor design and the use of memory in each device.

The TechInsights bill of materials for the Microsoft Xbox One amounts to $331. Based on this — and when the estimated costs for the peripherals are included — TechInsights believes Microsoft will have a gross profit of approximately $100 per console sold. This is far better than the $43 Sony will make per complete unit.

Said Al Cowsky, TechInsights’ costing director:

At the console level, the Xbox One is $10 less expensive than the PS4. This is primarily due to a $23 memory premium on the PS4, but it is offset by an $11 cost premium on the Xbox One processor. The Xbox One also has 4GB eMMC NAND flash, making the nonvolatile category $3 higher for Xbox One, while the housings/mechanicals of the Xbox One add another $4 premium over the PS4.
The Xbox One also comes with a Kinect vision system in-box with an estimated cost of $39. This is more than made up for by the $100 list price premium. Likewise, PS4 has an optional vision system accessory available for a list price of $60 (unit not costed at this time).

Though Microsoft seems to have generated more profit per console, it remains to be seen how the devices will compare as developers invest in building radical new games for the powerful platforms. Nonetheless, this initial profitability places both suppliers on equal footing for the real revenue (and profits) promised through the sales of games and the online experience.

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Sheetal.Pandey   2013-11-22 22:26:19

Having used PS3, would say its fantastic to use Sony's playstation. The video clarity and automatic updates are excellent. But XBox may also be good but havent used. As far as cost difference is concerned between Xbox one and PS4, there is not much. How is the sales difference betweent two devices, does people buy more Xbox than PSs.

Kinnar   2013-11-23 01:33:51

It seems overdosing hardware in the high-tech home by this kind of duplication of the same architecture devised for two different purposes. I mean the PC and Gaming console. I think they should sell on PC OS cartridge that will serve the purpose of computer on Gaming Console.

The trend of keeping a separating gaming console is becoming a profit making thing for these manufactures, why not to bring up a common device that can serve multiple purposes.

Kinnar   2013-11-23 01:48:00

May be the XBox designers have provided two communication ICs, one for sharing the game data between different Xboxes and other for communicating between the user/joysticks and the XBox. Games generally requires fast and instantaneous data transfers may be that is the reason one chip is dedicated for Wireless Network/Wi-Fi and other for Bluetooth and Near Field Communication. 

weit   2013-11-23 02:14:15

Both of these console are already multi-tasking media devices.  I wonder if there's really a demand of a "living room big screen PC".  The console makers have strong motivations to keep the boxes mutually exclusive, as they profit mainly on software/services/ecosystems, instead of hardware alone.

Kinnar   2013-11-23 02:41:26

That is correct what you say in case of exclusivity but at the same time these are very sophisticated devices that can surely be used for many other purposes. My words were not a shout towards the profitability of the console manufactures but they were towards motivating the possibilities in reusing the hardware to reduce the over flooding of the hardware's in today's life.

_hm   2013-11-23 09:21:32

@Sheetal: Yes, I concur with you. Price difference is not that significant and real market price after store discounts is different from this price.

Also, one needs to purchase many more acccessories and games alongwith subscriptions. This where they make most of profit.

And more significantly, user experience is most important aspect, e.g. Apple products. If user loves it, he will pay more for it.

 

_hm   2013-11-23 09:24:11

@Kinnar: Eventually some vendor will be think similar to you and may come out with unified architecture and it will unique selling point for them. It should happen in near future.

 

elctrnx_lyf   2013-11-23 11:44:01

Seems like flooding of gaming consoles. AMD seems to be the clear winner in both the hardware.

Kinnar   2013-11-24 03:26:55

You are right @"_hm", third party developments in this directions will be there in pipeline, but I was wondering why the OEMs are not supporting this kind of developments with minor tweaks and additions in the base system, they have very good network stack in their devices, and the era is of could computing these days.

Kinnar   2013-11-24 03:32:06

@elctrnx_lyf, yes after a long time an entire segment is going to be driven by AMD processors, sing Sony and Microsoft both are going to use their processors.

Alternatively it will be flooding of gaming consoles as every child will be willing to go for the new device, and all the previous consoles will go to dustbins, it is very high time to think of modular architecture, so save the entire box going in to dustbins.

_hm   2013-11-24 08:33:42

@Kinnar: May be this is an opening room for third player. Perhaps - Nintendo-Apple union can achieve this goal with Intel or A7 Processors. This may produce cool gaming experience.

 

Kinnar   2013-11-24 13:27:29

Yes there are actually many different devices which can be clubbed in on a common device platform. But it will come in existence when someone will be able to see profitability in to it.

rick merritt   2013-11-25 10:14:12

@hm: Apple is already a big dog in this game with its iPad iOS game platform

goafrit   2013-11-25 15:43:49

>> How is the sales difference betweent two devices, does people buy more Xbox than PSs.

So far, nearly even. No one is buying more. I think Wii is getting out of this equation now. Microsoft has mussled itself into the gaming equation and is excellently holding up to the Asian competitors in this business.

Caleb Kraft   2013-11-25 16:27:42

without raw purchasing statistics, just going from all the gamers I know I'd agree that it is pretty split. People tend to talk about their nintendo like it is on a completely different level than the xbox and playstation as well. They don't really see nintendo as competing for the same role.

Caleb Kraft   2013-11-25 16:29:01

The steambox is supposed to be basically a gaming computer for the living room. There is absolutely a need for it and they're hoping to fill that need.

_hm   2013-11-25 20:20:54

Yes, and now they have clicked PrimeSense purchase. This will give them good tools.

 

ChristophZ   2013-12-02 03:59:50

For me the interesting part is, that both companies make profit by selling consoles. The older generations of consoles where sold with a caluculated loss (PS3, PS2, Xbox360 and Xbox, not sure about older and Sega Systems. The 3DS was the first System Nintendo had to sell with a loss - Nintendo doesn't do this normally).


Seems to mee, that the market is more risky than some years ago. They decided to play a more safe game (financally) than for other consoles.

goafrit   2013-12-03 10:24:16

Most of these devices are reaching dimishing returns in the hardware differentiation. What will be the different will be the software. I think the hardwre is improving for all the makers. Game library will influence the decision on which one to buy

goafrit   2013-12-03 10:27:49

All games are computers packaged in a special way. Yet, the future of game console will be tested as the handheld "mobile devices" continue to become more powerful. I think in five years, they will have interface to connect games in tablets.

goafrit   2013-12-03 10:30:38

>> Seems to mee, that the market is more risky than some years ago.

You are correct - I do not see the console gaming business as a future growth business. There are many competitions right and left that they are all flanked. The opportunity for them will be in their libraries of games, getting to work in tablets and finding a new console that can be flugged into mobile devices

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