Teardown reveals Xbox One costs $90 more than PS4 to make

The combined costs of parts and manufacturing for the Xbox One comes out to roughly $471, almost $100 above Sony's PlayStation 4 ($381), according to a teardown report from IHS revealed by AllThingsD. The Xbox One sells for $499, while the PS4 goes for $399.

At least $75 of the $471 comes from the Kinect camera included with every system, the IHS report concluded. It features chips from Samsung and STMicroelectronics as well as a mysterious chip used to emit infrared light.

IHS was unable to determine the maker of this chip.

The single most expensive item, however, is the Xbox One's $110 AMD chip, which is around $10 more than the PS4's AMD chip. "They're both very powerful chips," IHS analyst Andrew Rassweiler said. "You might call them a gaming console on a chip."

The Xbox One's DDR3 memory chips stem from SK Hynix and came out to about $60, around $28 less than the cost of the PS4's higher-end GDDR5 memory chips. The system's all-new controller, featuring Wi-Fi and Bluetooth components from Marvell Technology, costs about $15 and sells for $60.

Unlike the PS4, the Xbox One features an external power supply, which costs around $25 to create, the report found, adding that the headset costs $10 to make and $14 to assemble.

Notably, Texas Instruments is a major parts supplier for the Xbox One, with six parts total in the system (four in the console and two inside the Kinect).

Because the Xbox One manufacturing cost is just $29 under its sale price (not to mention retailers taking their own cut of the retail price), Microsoft will look to software and services to post a profit. The reduction of manufacturing costs over time will also benefit Microsoft.

The PS4 and Xbox One have each sold 1 million units so far.