According to Daniel Ahmad, Senior Analyst at Niko Partners, the PS5 and Xbox Series X may be a bit more pricey than some PlayStation and Xbox gamers think. The prominent industry analyst recently took to to Twitter, noting that he's currently struggling to see how either the PS5 or next Xbox will launch at $400 or below given what we know about each console and their respective innards. As Ahmad astutely points out, the CPU, GPU, NVMe SSD, and GDDR6 memory by themselves would cost more than half this price, which suggest neither console will be positioned at said price point, as this would mean both would have to be willing to take a heavy lose.
Now, as you will know, console makers take loses up front all the time. For example, the PS4 wasn't selling at a profit at launch. However, it's one thing to eat a little bit of money at the jump in order to push hardware, but to sustain considerable loss at the gate is less common.
Taking a loss isn't unusual. It's been the case with many previous generation consoles. Console manufacturers have always used the razer blade model.
Even the PS4 hardware was sold at a loss initially, but became profitable in early 2014, a few months after launch.— Daniel Ahmad (@ZhugeEX) December 19, 2019
In other words, it's not impossible either console could ring in at $400, just unlikely given how much of a loss it would be for Sony and Microsoft. Yet again, the PS3 cost about $800 to make and was sold at $500, which is why Ahmad isn't ruling out the possibility entirely.
My point is the build cost of these next gen consoles will be higher, meaning a sub $400 retail price would lead to a heavy loss per unit sold.
I don't think it'll be as bad as PS3, which cost $800 to build at launch (Sold for $500). But it's something to keep in mind.— Daniel Ahmad (@ZhugeEX) December 19, 2019
Ahmad's speculative and insightful thread continues before concluding with a hypothesis of how much the Xbox Series X costs to make, which is $460 to $520. This is just materials plus manufacturing of course, and doesn't include all the money spent on research and development. That said, Ahmad points out for now this is just an estimate, and thus shouldn't be cited while at the bookies.
Right now I’m expecting the bill of materials + manufacturing cost for a Series X console to come in around the $460 to $520 mark. (This isn’t the retail price).
Of course this is a very early estimate and could be wildly off. I’ll update this once more info is confirmed.— Daniel Ahmad (@ZhugeEX) December 20, 2019
Anyway, as always, feel free to leave a comment letting us know what you think. How much will the PS5 and Xbox Series cost?
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