We all know next-generation consoles will be expensive to produce, and although they may only rise in cost by $100 USD (from PS4’s $399 to PS5’s expected $499), Sony may also be taking a loss on top of that, meaning its cost to manufacture at launch could be somewhere around $699 per unit. This is a throwback to the old days in which Xbox 360 launched at a $300 loss and PlayStation 3 shocked the world with the $599 price point during US Recession only to reveal the cost to produce started out between $999 to $1099 per unit.
Of course, costs go down over time, but in order to provide the quality product that users expect with PlayStation 5, Sony has taken it upon themselves to aim higher. That strategy was not cheap either. Sony representatives in a recent interview confirmed that the majority of the parts needed for PS5 have all been secured and noted that the cost of each part has exponentially higher than usual rates for launch units, citing such devices as Samsung’s upcoming S20, S20+, and S20 Ultra (LTE and 5G variants), as competitors for parts and production space in the few plants capable of the output PlayStation 5 will require.
Sony halted production of mirrorless cameras to ensure PS5 price and release date
As a way of guaranteeing more memory available to themselves leading up to the PlayStation 5’s deadline for manufacturing, Sony has opted to de-prioritize some previously planned features of this year’s camera lineup according to executives at the firm during their latest conference call to investors. This is unusual and marks the urgency of events transpiring to threaten the PS5’s release, as previously rumored in underground gaming websites. And if Sony is doing this, that means it might’ve been a close call.
Each PS5 will require: SSD (using proprietary cooling solution), (likely DDR4 DRAM paired with) GDDR6 VRAM, as well as the memory modules required for AMD’s processing, graphics, and physics chiplets (beefier than usual to support 8K). Sony has chosen to prioritize the shipment of as many PlayStation 5 units are needed by consumers when the next-generation console launches “Holiday 2020” directly competing with Xbox Series X by Microsoft.
New products surge demand during memory shortage
During the known NAND & DRAM shortages, ultra fast flash memory units are being fought over between tech giants such as Sony and Samsung, even if customers take them for granted these days. With six SKUs for the United States, and global support for many others, the Galaxy S20 will use a lot of memory.
The Galaxy Z Flip is spicing up the market with its reinforced, covered hinge design, and split operating system customization, there will be no better folding phone for quite a while. It’s leagues ahead of the Moto Razr 2019. Meanwhile the S20 and S20+ up the ante as flagship devices competing with Apple’s iPhone 11 Pro and iPhone 11 Pro Max.
That’s not all, Samsung is launching a whole series of new mid-range phones (A91, A71, A51, etc.) boasting much faster 8-core processors capable of high-end gaming, 5G support, and better cameras, to replace their wildly popular 2019 models; the A70 and the A50.
The Samsung Galaxy S20 Ultra 5G will be the first of its kind from Samsung, designated as a “SuperPhone” class device capable of 8K video recording at cinematic framerate, 4K at 60Hz, 1080P up to 240Hz, and 720P with up to 960Hz (for slow motion capture), and the ability to capture a subject 100 yards away with the clarity of being only 1 yard away.
Samsung has sold over 300 million smartphones last year (including all SKUs), and every one of them was using the latest in memory technology.
By comparison, PlayStation 4 has shipped 108.9 million units *as of December 31, 2019 (including all SKUs) but has taken six and a half years to do so. Their Galaxy S20 line up will use 12 – 16GB LPDDR5 per phone plus 128GB – 512GB NAND storage per unit. PlayStation 5 will be using considerably more than that with both units also housing graphics chips that make use of NAND, DRAM, and hybrid memory technologies.
Sony issues statements reassuring fans and investors
The manufacturing of PS5 is still on track despite some delays in the industry beginning to occur as sickness in China is causing shutdowns of major factories and companies scrambling to relocate the heart of electronics manufacturing to South Korea, Vietnam, and Taiwan. But even as Samsung has completely left China and Sony is mainly based in Japan, these delays can still affect the smaller parts which are sometimes used to fabricate larger ones.
Sony’s engineering team has confirmed through representatives of the company to investors and fans that the PlayStation 5’s full parts list has been secured already, and that the console will not be delayed due to the Coronavirus, contrary to recent rumors.
In addition to this confirmation of release date expectancy, it has been revealed that Sony has gone all out this time around with each and every part chosen for assembly into the PlayStation 5. Even parts such as basic heatsinks that could be afforded for $1 have been budgeted to higher quality, more reliable, and all frills included parts which can cost up to 20x the amount of generic.
In other words, PlayStation 5 is not delayed, and it’s worth the wait.
PlayStation 5 Price Update
While many believe that $399 USD or $499 USD is most likely the price for the PlayStation 5 when it launches this Holiday 2020. However, Sony still has not figured out what the price should be.
During the latest quarterly earnings call Hiroki Totoki (Sony CFO) has urged investors to consider that most of PlayStation’s revenue now comes from monthly active members and not from hardware units sold. This was likely either in preparation of worst-case scenario or to prepare their investors to take a loss on PS5 hardware units in order to make profits on monthly services and game sales. Given Sony’s usual brand of confidence, it would seem the latter of the two would be the case.
Sony will await Microsoft’s next move to update their strategy as the PlayStation 5’s cost is roughly $450 USD manufacturing cost per unit and the company remains stuck with indecision over what to charge.