Wed. Sep 28th, 2022
Report: Sony can't build a PS5 for under $450

Aurich Lawson

Video game enthusiasts around the world are looking forward to the launch of Sony’s PlayStation 5 this fall, but a new report says challenges in finding affordable parts could mean the console has a higher price tag than players are willing to pay.

Sony has so far been unable to get the production cost for a PlayStation 5 under $450, Bloomberg reports, which could lead to problems for the company.

The consoles are slated to hit shelves within the next ten months, but apparently some parts of them aren’t final yet. “We need to keep the PlayStation 5 material list under our control, and we need to make the right number of units in the first production,” said Sony Chief Financial Officer Hiroki Totoki in a recent earnings call.

Sources tell Bloomberg that the problem is essentially old-fashioned supply and demand. Sony doesn’t just compete with console rival Microsoft for parts; other appliance makers are also in the mix. Prices for DRAM and NAND flash memory are said to be high due to high demand from companies such as Samsung launching new generations of high-end flagship mobile phones.

Sony is also reportedly spending more than usual on the console’s cooling system to avoid overheating. Its promised hardware, including an eight-core AMD Ryzen CPU built on the 7nm Zen 2 microarchitecture and an AMD Radeon-based GPU with ray-tracing support, can probably use it.

That’s in line with what we know about Xbox Series X, which is reportedly built with nearly identical AMD architecture. Late last year, Microsoft revealed how big its console will be, possibly an indication of its own complicated cooling design. We don’t know what the final PS5 hardware will look like yet, but the V-shaped dev kit inspired almost as much discussion about its own cooling requirements as it did jokes about using the console as a pizza holder.

A difference of a dollar here and a dollar there is indeed correct. Sony could theoretically decide it’s worth selling the consoles at a loss and making the money elsewhere. Much more likely, though, that whatever Sony has to pay to get a console made, consumers will pay more than that to buy one. The current generation PlayStation 4 reportedly cost $381 per unit to produce originally. At launch in 2013, units were selling for about $20 more than that — a thin margin, to be sure, but a margin nonetheless. If Sony followed a similar tactic this time around, the projected launch price for a PS5 would be around $470.

We have asked Sony Interactive Entertainment about the report, but have not yet received an answer.

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Sony is of course not the only player in the console gaming market. Whatever the PS5 cost will no doubt be informed by the price Microsoft is setting for the next iteration of the Xbox line. The Series X, like the PS4, is slated to hit stores for holiday 2020, which means someone needs to blink first.

Industry watchers expect Microsoft to showcase additional details, including pricing, for the Series X console (or consoles) at this year’s Electronic Entertainment Expo in June. However, Sony recently confirmed that it will not be attending E3 and will not be presenting. Without a known press conference on the calendar months in advance, Sony has more flexibility in determining when and how it will announce a price point and other details.

Being second definitely has its perks. Holding fire certainly worked well for Sony at the start of the previous (current) console generation; the announcement at E3 2013 that the PlayStation 4 would be selling for $399 came a few hours after Microsoft announced a $499 price point for the Xbox One. The reveal was a mic-drop moment for the ages, as these things go, and set the tone for the fall launch. (Sony has made a similar move in generations past when it blew the Sega Saturn out of the water.)

Launch price isn’t everything, of course. A console generation in the 21st century seems to last about seven years, and several price drops and refreshed SKUs are now standard mid-cycle developments. Shortly before the PS4 and Xbox One launched, Ars looked at historical price data and found that price drops were common two to three years after launch. The PS4 and Xbox One were no exception: The PS4 dropped to $349 in 2015, and the original Xbox One dropped to $249 in 2016 ahead of the launch of the smaller, cheaper Xbox One S that summer.

From what we know of the Series X so far, the specs are close enough to Sony’s that both consoles could eventually launch at the same price. However, Microsoft may still have a key to enter Sony’s plans. Reports indicate that Microsoft is also working on a cheaper, digital-only gaming box that will be sold alongside the Series X this fall.

There are conflicting reports about exactly what kind of digital experience Microsoft is envisioning. Some reports say the mid-range console, codenamed Lockhart, was scrapped in favor of working on a streaming-only device that would work more like a gaming Roku (or Google’s still-challenged Stadia) and be priced at a comparable, less than $100 range. However, other reports indicate that Lockhart is still operating as a lower-powered diskless console and developers are expected to fully support it alongside the Series X, similar to what Microsoft did with the Xbox One S. when they come out, they can fall into the sweet spot where Microsoft has something to sell for half or less of whatever the PS5 price ends up being.

By akfire1

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