Despite a small increase in bill-of-materials cost, the new Xbox One S delivers for consumers in terms of improved performance and features, according to preliminary results from the Teardown Analysis Service at global business information provider IHS Markit (Nasdaq: INFO).
The combined hardware and manufacturing cost of the new Xbox One S game console from Microsoft, the new analysis says, amounts to $324. That’s just $24 more than the most recent Xbox One teardown analysis conducted in March of this year, primarily due to upgrades in the fabrication of its central processing unit (CPU), the inclusion of a two terabyte (2TB) hard drive and an ultra-high-definition (UHD) BD-ROM player in place of the previous conventional Blu-ray drive.
“The new Xbox One S represents a natural evolution in the product line, incorporating technical advancements that have become available since the previous design,” said Kevin Keller, the senior principal analyst for IHS Markit who spearheaded the teardown analysis. “It provides the improved performance, smaller form factor, and enhanced features that gamers expect and demand.”
The manufacturer’s suggested retail price is $399 for the 2TB model, which is $75 more than its bill of materials and manufacturing costs. A lower-priced version, sporting a lower-density hard disc drive (HDD), is also available for $299.
“It is typical in consumer electronics to adopt a ‘give away the razor, sell the blade model’ when a product is initially introduced -- particularly in the gaming sector -- given that buyers are also expected to purchase new games to play on the devices,” Keller said. “Even in this case, while not completely upside-down, margins are still slim once you consider all of the downstream value-add.”...