If you’re wondering why the Xbox One costs $100 more than the PlayStation 4, it’s because the Xbox One costs more money to manufacturer. According to AllThingsD, it costs $471 to build one Xbox One console, whereas the PS4 costs $381. This means that it costs $90 more to make an Xbox One console compared to a PS4, which is why Microsoft’s gaming system costs $100 more on retail shelves.
This cost of manufacture means that Microsoft is only profiting $28 for every Xbox One console it sells. Granted, Sony is only making $18 per PS4 console sold, but the margin for profit with both consoles is incredibly thin, so if you think Microsoft is making the big bucks by charging $100 more for its console compared to the PS4, just remember that the company isn’t making a huge profit from console sales either.
Of course, Microsoft will make even more profit from digital content sales, as well as accessories, where the markup for peripherals and various accessories is usually on the high side. For example, it costs around $15 to manufacture a Xbox One controller, but Microsoft sells them for $60 a pop.
As for a breakdown of the cost of the Xbox One, at least $75 of it makes up the Kinect sensor. However, the most-costly component in the Xbox One is obviously the processor from AMD, which costs around $110. As for the RAM, you’ll find DDR3 memory in the Xbox One, with a cost of $60, compared to DDR5 memory in the PS4, which costs $28 more, allowing Microsoft to keep the costs down.
The external power supply costs around $25, and other contents that come with the console, including the headset, cost about $10 total. Add all that up, along with the costs to actually assemble the console, and you get $471, which is just shy of the $499 retail price tag. Microsoft is expected to lose around $1 billion this year alone with the Xbox One, after factoring in marketing costs and research & development. However, over time those costs will decrease and Microsoft will make that money back (hopefully).