A new report from Bloomberg on the Playstation 5 indicates that the console’s price may be a problem in the upcoming next-gen console war with Microsoft, and that’s thanks to the cost of manufacturing the console.
Bloomberg Report on PS5
According to Bloomberg, the cost of manufacturing PS5 consoles runs at about $450 per unit, and that’s thanks to the scarcity of components needed to make the software. This would be a departure from the PS4, which was estimated by IHS Markit to cost $381 per unit to manufacture. The Playstation 4 was released in 2013 at a price of $399, meaning that if Sony wants to make a similar profit off of the PS5, the unit would have to cost at least $470 at release.
Damian Thong, an analyst at Macquarie Capital, told Bloomberg that this could be a tough sell, given that the most expensive PS4 model on the market right now is the PS4 Pro, which is sold at a retail price of $399.99 and is routinely discounted. Thong added, “Consumers will benchmark their expectations based on the PS4 Pro and PS4. If Sony prices above that, it would likely be to balance a need to offset higher materials cost, against risk to demand.”
Bloomberg reported that the major issue that’s driving up the manufacturing cost is the DRAM and NAND flash memory. Both are in significant demand, as both are used for smartphones, and with the fifth-generation of smartphones coming up on the horizon, having a reliable supply of these memory chips is proving to be a problem.
As far as the unit goes, Bloomberg reported that most of the components have been locked down, including the cooling system. which Bloomberg’s sources said is “unusually expensive at a few dollars per unit.” Sony opted for a more expensive system to make sure that heat dissipation from the chips isn’t a problem.
Despite this news, the console may not be a total bank-breaker for consumers For one, the price of the PS5 will be affected by the Xbox Series X. The price for the new Xbox console is not expected to be released until June, so the finalized price for the PS5 may not be hashed out until then. Second, Sony, along with Microsoft, are expected to expand their subscription service this year, which could lead to increased revenues. This could allow Sony to be more flexible on the PS5 price.
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