joe_zazen
Member
This is not that complicated, AMD sells all their hardware with profit, margins vary based on quantity (wholesale discounts etc.). If MS placed an order for let say $2bn they will usually get all SKUs within this order at some discounted price compared to someone who placed an order for $1bn. I am sure that before starting the development of new consoles both Sony and MS sent pricing requests to like of nVidia and Intel, not only AMD, and selected AMD based on a,b,c etc. Same applies to SSDs, Microsft simply orders more of them than Sony (whole Surface family + Xbox + Azure). It is a simple business, bigger buyers are getting better prices.
amd does not sell hardware to xbox & sony. They sell tech and engineering.
anyway, this guy from resetera sums it up better than me
i don't usually chip in with comments on these issues because you always get swamped by armchair analysts. but 12 years in manufacturing as a quality compliance manager means i probably know a bit extra (a bit)
a BOM (bill of materials) is (usually) just a list of the physical components needed to make the thing... as in the parts, the bits
(usually) it doesn't take into account labour, heat, light, machinery costs, business rates, etc etc etc... (usually)
what it certainly doesn't include is taxes, duties, shipping, contractors, marketing, point of sale commission, and everything else i'm forgetting
if your BOM is 450... and you sell for 500... you WILL make a loss... absolutely 99%
my 1% doubt is if someone as big and powerful as Sony really does have position to leverage a deal... if they can, it will be for a few negligible coins, nothing substantial
so all in all, from what's been leaked, a 500 PS5 will (probably) run at a loss
but don't worry plastic box full of microchips fans... their competitors will be in the exact same boat... (and probably worse if their thing costs more)
sony (and microsoft) have numerous entertainment revenue streams... so as many have already stated, you run at a loss here to create brand awareness and trust, then your other services make up the difference and put you in the green
edit jezuz i am grumpy today. Sorry.
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