Teardown pegs Microsoft Xbox One BOM, manufacturing costs at £290

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Xbox One is costing Microsoft £290 ($471) to manufacture, a latest teardown report from IHS claims.

The same firm, which tore apart Sony PlayStation 4 a few days back and calculated its BOM and manufacturing costs at £234 ($381), has pegged the BOM of Xbox One at £281 ($457) and manufacturing cost at £9 ($14) taking the total cost to £290 ($471) – if we leave out R&D. IHS has revealed that Microsoft will in fact be making a loss on each console at a selling price of $499 if other costs are added into the equation.

The teardown report puts a price of £68 ($110) on the Xbox One processor from AMD, which is £6 ($10) higher than PlayStations 4’s processor, while the RAM is costing Microsoft just £37 ($60) as compared to a whopping £54 ($88) on PlayStation 4. Some of the other component costs involved in Xbox One are £20 ($32) for the optical drive, £23 ($37) for the hard drive, £27 ($43) for the mechanical / electro-mechanical components, and £31 ($50) for other electrical components.

One of the major differentiating factors between Xbox One and PlayStation 4 when it comes to costs is Microsoft’s decision of bundling its Kinect camera sensor, which itself is costing the company an estimated £46 ($75) for every console sold. On the contrary, Sony decided against inclusion of PS4 camera that translates into immediate savings and lower costs. Further, Microsoft opted for an external power supply worth £15 ($25), while Sony chose a less expensive power supply inside the console.

IHS analysts are of the opinion that Microsoft’s choice of keeping the sales price at a lower outlay may help the Xbox One creator to provide for more lucrative price point for other related hardware. IHS senior principal analyst Steve Mather claims “The Xbox One is designed to serve as a beachhead in the home for Microsoft, with the console’s capability to interact with—and interface to—other devices, such as televisions, set-top boxes, smartphones and tablets,” and lower price point may very well help Microsoft gain a strategic advantage “in the battle to control the connected home and Internet-enabled living room.”