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IHS: Xbox One core architecture very similar to PS4

Posted: 28 Nov 2013 ?? ?Print Version ?Bookmark and Share

Keywords:console? CPU? GPU? SoC?

Microsoft appears to be subsidising the cost of the new Xbox One when it launched the game console with a combined hardware and manufacturing price of $471, according to a teardown by IHS. The research firm also pointed out that the Xbox One's core architecture is almost identical to Sony's just released PlayStation 4.

The Xbox One carries a bill of materials (BoM) of $457 with manufacturing estimated at $14, meaning the console's total cost of $471 is only $28 less than the retail price of $499. This is very similar to the PS4, which carries a hardware and manufacturing cost of only $18 lower than its retail price (see Sony near breakeven with PS4). Microsoft initially will take a loss on each Xbox One sold when other expenses are added into the equation, just like Sony.

"For both Microsoft and Sony, their latest-generation video game console hardware is unprofitable at the time of release, requiring the companies to subsidise it initially," said Steve Mather, senior principal analyst for IHS. "However, these companies easily can largely compensate for their losses though sales of highly lucrative game titles. Meanwhile, as the cost to produce the consoles decreases according to the normal learning-curve dynamics in the electronics industry, the companies can cut their retail pricingor pad their profits. Over time, Microsoft is likely to reduce the retail price of the Xbox One in order to maintain sales momentum."

IHS: Xbox One core architecture very similar to PS4

Figure 1: Xbox One exploded view.

Microsoft may also be more willing to take a loss on hardware sales with the Xbox One than it has for its previous-generation products.

"The Xbox One is designed to serve as a beachhead in the home for Microsoft, with the console's capability to interact withand interface toother devices, such as televisions, set-top boxes, smartphones and tablets," Mather noted. "Gaining such a strategic advantage in the battle to control the connected home and Internet-enabled living room is well worth having the Xbox One act as a loss leader for Microsoft."

AMD takes the lead in gaming

The Xbox One's core architecture is very similar to the PS 4, with most of the functionality of the two systems residing in highly integrated SoC devices supplied by Advanced Micro Devices.


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