According to a breakdown performed by IHS of the PlayStation 4, the console costs $381 to manufacture, $18 cheaper than the $399 retail price. This gives Sony a very slim profit margin, which is most likely eaten up by distribution and retail costs. However, this is a far better position than in 2006 when it was estimated it cost $805 only to sell at $599.
Few consoles have ever been sold at a profit on launch and usually it takes years for manufacturing costs fall low enough. Though the price usually drops in tandem with it.
The cost of the processor and memory work out at nearly half the total cost at $188. Additional costs like the controller ($18), the hard drive ($37) and the optical drive ($28) make up the rest of the costs.
Andrew Rasseiler of IHS, notes that "If your cost is within $10 to $20 of the retail prices, there's very little chance you're making a profit on the console. It looks like once again, when it comes to profits, it's all about the game titles."