Teardown Reveals Xbox One Costs US$471 to Build
According to a recent teardown of the Xbox One conducted IHS, it was found that the Xbox One costs US$481 to build - this includes the cost of components and manufacturing. This means the Xbox One costs U$90 more to build than the PlayStation 4. Also, considering the Xbox One retails for US$499, this gives Microsoft a margin of just US$18.
The analysis also revealed that the single most costly component is the processor from AMD, which is estimated to cost US$110. Other interesting tidbits include Microsoft saving around US$28 per console thanks to its decision to use slower but cheaper DDR3 memory - the PlayStation 4 uses GDDR5 memory. The Kinect sensor, a compulsory accessory, was estimated to cost US$75 to build.
Looking at the tiny profit margins, Rick Sherlund, an analyst from Nomura Securities, estimates that Microsoft will lose a whopping US$1 billion this year on the Xbox One, thanks to research and development and marketing costs.