The company fails to close the manufacturing cost of the machine due to the costs of some components. The margin will be very tight.
The manufacturing costs of some PlayStation 5 components are preventing Sony from deciding the price of the console. According to Bloomberg in its latest report, sources close to this media say that Sony Corporation is considering manufacturing costs of $ 450 per unit, which will force the Japanese firm to adjust the sale price of PS5 to the maximum, whose margin will be very small
PlayStation 5 will hit the market at Christmas 2020, as will its competitor, Xbox Series X, where Microsoft acts in parallel keeping the same silence around that figure, the price. For this circumstance, Sony plans to wait for Redmond to reveal the amount to be paid in stores before revealing the price of its fifth generation of home consoles.
According to this same source, Sony usually decides the price for the month of its next consoles the month of February of the year of departure, since the production chains begin in spring. This time it is not possible. The biggest problem is in the supply of DRAM units and NAND flash memory; high with a very high demand from the manufacturers of smartphones, as they have learned. Among the companies that most demand these reports for the international market are the South Korean Samsung and Sony itself.
Jim Ryan, during the PS5 presentation event held at CES 2020, Las Vegas
Analysts: PS5 will cost at least $ 470
"Consumers will be the rod of measuring expectations based on what we have seen with PlayStation 4 and PS4 Pro," complements this information market analyst Damian Thong, representing MacQuarie Capital, also close to the news. "PS4 was put up for sale in 2013 at a price of $ 399, and from IHS Markit they estimated it would cost $ 381 for its manufacture," says Bloomberg. In effect, the profit margin for Sony would be greatly reduced this time with PlayStation 5 by having to increase the manufacturing cost of each unit more than expected.
Sony has declined to comment on this information.
Sony priorities for the next generation of consoles
“With a manufacturing cost of $ 450 for PlayStation 5, and trying to find a similar revenue margin, the console's retail price should be at least $ 470; difficult to sell to the general public considering that PS4 Pro, right now, is its most expensive machine with a price of $ 399 and discounts frequently. ”
Sony, aware that it must produce the exact units of each component
Hiroki Totoki, CFO of Sony, told the investor group last January its concern to produce as close as possible the number of components to the necessary, thus balancing the costs so as not to unbalance the possible profit margin.
Takashi Mochizuki, who signs the report, recalls that "video game companies tend to sell hardware with very low profit margins or even losses because the real benefit lies in the sale of software such as video games, online services and subscriptions." In addition, Kenichiro Yoshida, CEO of the Japanese giant, said the business should be measured not so much by the number of consoles sold as by the number of active users.
Sony closed last August the purchase of the Insomniac Games studio, parents of Marvel’s Spider-Man | Insomniac Games
Microsoft, its top parallel competitor in the domestic hardware market, has not offered sales figures for its Xbox consoles for several years; now they only transcend data from active users.
So, the end of the month of February is approaching and PlayStation 5 is still without starting price, nor launch games catalog or other details. The outbreak of the Wuhan coronavirus, in case of aggravation, can delay the launch plans of both this and Xbox Series X. Recently, PS5 has opened its own website, where it is expected to offer news in the coming weeks and months. Not in E3 2020, however, since Sony has declined to participate for the second consecutive year.
