A shortage of components has pushed manufacturing costs for Sony Corp.'s next PlayStation to around $450 per unit, forcing a difficult price-setting decision in its battle with Microsoft Corp., according to people with knowledge of the matter.
The tech giant is preparing to gradually replace the 6-year-old PS4 console, releasing its PlayStation 5 the same holiday season its archrival launches the Xbox Series X. Sony typically finalizes a console's price in February of the release year, followed by mass production in the spring. With the PS5, the company is taking a wait-and-see approach, said the people, asking not to be named because the details are private.
The PS4, released in 2013 with a retail price of $399, was estimated by IHS Markit to cost $381 to make. With the $450 unit cost and a similar gross margin, the PlayStation 5's retail price would have to be at least $470. That would be a hard sell to consumers, considering Sony's most expensive machine now is the $399.99 PS4 Pro and is often discounted, according to Macquarie Capital analyst Damian Thong.