Microsoft comes out punching with a significant upgrade to Xbox franchise console and true competitor to Sony’s PS4 while still delivers per unit profits. TechInsights Teardown costing shows both companies can profit from sales of their gaming consoles this holiday season. In fact both vendors used many similar parts to optimize their investment in the next generation of gaming consoles. While AMD came out as a big winner in the APU (integrated CPU and GPU) there are choice design differences around the both the processor design and the use of memory in each device. The TechInsights bill of materials (BOM) for the Microsoft Xbox One amounts to $331.00. Based on this – and when the estimated costs for the peripherals are included – TechInsights believes Microsoft will have a gross profit of approximately $100.00 per console sold. This is far better than the $43.00 Sony will make per complete unit. “At the console level, the Xbox One is $10 less expensive than the PS4. This is primarily due to a $23 memory premium on the PS4, but it is offset by an $11 cost premium on the Xbox One processor. The Xbox One also has 4GB eMMC NAND flash, making the non-volatile category $3 higher for Xbox One, while the housings/mechanicals of the Xbox One add another $4 premium over the PS4.” The Xbox One also comes with a Kinect vision system in-box with an estimated cost of $39. This is more than made up for by the $100 list price premium. Likewise, PS4 has an optional vision system accessory available for a list price of $60 (unit not costed at this time)” - Al Cowsky, Costing Director, TechInsights While Microsoft seems to have generated more profit per console it remains to be seen how the devices will compare as developers invest in building radical new games for the powerful platforms. Nonetheless, this initial profitability places both suppliers on equal footing for the real revenues (and profits) promised through the sales of games and the on-line experience. AMD at the Heart of Gaming From a technology standpoint both systems have an AMD chip at their heart. Both the Xbox One and the PS4 run nearly identical 28 nm AMD 8 core APU (2 Quad-Core Jaguar modules), yet Microsoft has overclocked theirs to run at 1.75 GHz versus the PS4’s 1.6 GHz. However where the difference really lies is in the GPU. While both companies used GPU modules nested within the processor package the Sony PS4 contains 1152 cores versus the XBOX’s 768. We have decapped the processor die for each and are working on more in-depth analysts of these devices. From a BOM standpoint the Microsoft Xbox One processor is estimated to have cost slightly more at $132.00, versus Sony’s version that came in at $121.00. Different strokes for different folks The approach to system memory is the significant variation between these two gaming consoles. The choices each vendor made will likely have significant influence on how gaming developers design and extract the most out of each system. In the PS4, TechInsights documented Sony’s use of Samsung’s GDDR5 (DRAM memory optimized for graphics) while in Microsoft’s Xbox ONE we extracted 16 SK Hynix DDR3 chips. The costs difference between these choices was significant as Sony’s investment in a graphics optimized technology led to an estimation of $62.00 while the Xbox’s DDR3 totalled $39. Microsoft spent rough half of what Sony did on the memory. “Microsoft has chosen to closely mimic conventional PC architecture with a support processor dedicated primarily to IO operation (HDMI in and out, USB 3.0, Kinect, and Ethernet ports) the fashion of a Southbridge chip. In Addition, the Microsoft Xbox One appears to have significantly over-engineered the cooling of the Xbox One. The console contains a 5-inch fan that dwarfs the one contained the Sony PS4. This has been placed directly over the main processor no doubt to mitigate some of the negative user experience cause by overheating in the XBOX 360.” - - Dr. John Scott-Thomas, Product Manager Semiconductor Analysis The connected gaming experience Interestingly both manufactures chose to use Marvell for connectivity. In fact, in the Xbox One there are two Marvell ICs! The first Marvell chip (88W8782U) is dedicated to the WLAN (802.11 a/b/g/n/ac) and the second (88W8897M) does WLAN+BT4.0+NFC. This second chip is the latest from the Marvel Avastar product line. Further testing will be done to determine why Microsoft felt the need for two of the WLAN chips. TechInsights’ Teardown.com team have torn down the Sony, Nintendo, and Microsoft device in the past and more information on both technology and costing of these devices as they evolved is available on our web site. Note: * TechInsights BOM costing focused on the gaming console. If you include the controller, headset, and camera (optional on PS4) TechInsights estimates the total cost would increase by about $40.