PS4 expected to be 50 cheaper than Xbox One

first_imgWith both next-gen consoles announced by Sony and Microsoft, talk now inevitably turns to how much we will be expected to pay for the PS4 and Xbox One. The only evidence we have so far of pricing is what retailers choose to list as a pre-order price. In the case of the Xbox One, that’s $770 according to Amazon Germany.I’ve said before that with both consoles expected to launch at roughly the same time later this year, price is going to be a key selling point. Whoever comes in lower has an automatic advantage, and now well-known Wedbush Morgan analyst Michael Patcher has thrown his hat into the ring and stated the PS4 is going to be the cheaper machine.Patcher predicts that the PS4 will sell for $349 where as the Xbox One will be a $399 console. The reason for the price difference comes down to the bill of materials, which he estimates as $275 for the PS4 and $325 for the Xbox One. It therefore makes sense the Xbox One should cost more, but it’s not that simple.Historically, both Microsoft and Sony have sold new consoles at a loss in order to hit a price point and build up the user base quickly. Profit comes later as the hardware gets cheaper and from ongoing sales of games, services, and accessories. With the hardware inside both consoles being much cheaper this coming generation, it’s actually easier for both companies to make a profit on the hardware, but that’s no guarantee they will.Sony could choose to sell the PS4 at cost, meaning a $274.99 launch price is possible. Microsoft on the other hand may sell at a loss to match that, or could subsidize the console with Xbox Live subscriptions. The Xbox One is going to need an Internet connection in order to play new and used games, so doing a deal that sees it offered cheaper with a broadband/Live Gold subscription makes sense.Whatever the final price ends up being, if the PS4’s bill of materials really is $50 cheaper than the Xbox One, Sony has the upper hand when it comes to pricing and profitability. And if the PS4 turns out to be a more powerful machine too, Sony could hit the ground running come launch day.last_img read more