Xbox One News: Teardown of Console Reveals True Cost of Console

The Xbox One costs $499 dollars to own, but a teardown of the console by AllThingsD reveals exactly how much the console costs to build, along with how much profit Microsoft makes on each console sold.

Much like the teardown of the PlayStation 4, the Xbox One shows that Microsoft is not making a whole lot of money selling the console to gamers. Each Xbox One costs $471 to make, meaning that Microsoft nets $28 in profit for each sale. In comparison, the PlayStation 4 retails at $399 and costs $381 to build, giving Sony $19 in profit from the console. This means that the Xbox One costs nearly $90 more to build and manufacture than the PlayStation 4, which explains the higher price point the console has.

The biggest single component driving the price up on the Xbox One is the AMD microprocessor, which costs $110. The chip combines a CPU and GPU, and due to that advance technology the Xbox One has the highest price tag for any console now available. The microprocessor is also the single most expensive item in the PlayStation 4, but that component costs $10 less in that console.

Another big component that drives up the price of the Xbox One is the Kinect that comes with each and every console. The device adds an extra $75 in manufacturing costs to the Xbox One. This component also is the biggest reason for the price difference between the Xbox One and PlayStation 4, as it adds a big cost to the Microsoft console while the PlayStation 4 skips the mandatory motion sensor device and thus save money doing so.

Other big costs for the Xbox One include the internal memory for the device. Using DDR3 memory the console has $60 in costs due to the component, but this is less than the PlayStation 4 due to that console's use of newer DDR5 technology. The power brick also adds an additional $25 to the console, and the new Xbox One controller costs $15 to build and are given away free with the console. The headset included with the Xbox One costs $10, and overall production costs add an additional $14 to the console.

It will be interesting to see if the Xbox One or the PlayStation 4 is able to cut down manufacturing costs the quickest, and thus pave the way for potential price cuts. With so little leeway in terms of profits from console sales combined with strong demand, it is unlikely that either console will face a price cut anytime soon.