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Microsoft Xbox One S makes a play for the big time for only $24 more, teardown shows

05 August 2016 Andrew Rassweiler

For just a small increase in manufacturing and hardware costs over its predecessor, the newly released Xbox One S is Microsoft's strategic attempt to position the game console as a strong alternative to the upcoming PlayStation 4 Neo from Sony, analysis that is borne out by the latest IHS Markit Technology teardown.

The combined hardware and manufacturing cost of the new Xbox One S game console from Microsoft amounts to $324, according to the IHS Markit Technology Teardowns & Cost Benchmarking service. That represents only $24 more than the most recent dissection conducted in March on the Xbox One-the previous Xbox One version. The original Xbox console was first introduced in the United States in 2001.

The total bill-of-materials (BOM) cost for the Xbox One S is $324.07. This includes the direct materials or components cost of $312.07, along with a conversion cost of $12.00 accounting for insertion, assembly, and tests. The manufacturer's suggested retail price is $399 for the 2-terabyte version, or $75 more than the total BOM. Microsoft also offers two other hard-disc configurations, at 1 terabyte and 500 gigabytes.

The single largest BOM component is the processor, comprising the central processing unit (CPU) as well as the graphics processing unit (GPU) system-on-chip. The processor is supplied by AMD from California's Silicon Valley and fabricated by the behemoth Taiwan Semiconductor Manufacturing Co.

Using a 16-nanometer (nm) FinFet process instead of the usual and older 28-nm lithography, the die-shrink process at this early stage results in a lower yield rate that is reflected in the $99.50 cost for the processor. However, as production matures for the device and yield rates rise, costing for this particular stage and component is expected to come down.

Below is a view of the main printed circuit board of the console.

Overall, the improved processing capability is one factor accounting for a stronger Xbox offering. A second variable is the ultra-high-definition Blu-ray drive (UHD BD), an upgrade from the conventional BD device in the older Xbox. A third element is the high-definition multimedia interface (HDMI) port in order to support 4K video, the upscaling of 4K games content, and high dynamic range (HDR)-sharper contrasts and deeper blacks-in 4K output.

Altogether the storage component of the Xbox One S, including the hard disc drive from Seagate and the Blu-ray optical disk drive from Taiwanese-based Philips & Lite-On Digital Solutions (PLDS), amounts to $88.50, the second largest cost element for the console after the processor.

With the lower power requirements of the new CPU, Microsoft was able to address several major complaints of the previous design-the ungainly size of the console, excessive fan noise, and the need for an external "brick" power supply. Reduced cooling requirements paved the way for a smaller and simpler fan/heatsink solution, allowing for quieter performance and a reduction in enclosure size. Moreover, the decreased consumption results in a smaller power supply, now housed inside the console rather than as an external stand-alone unit. The smaller size of this module, combined with the elimination of its own enclosure, reduced the cost from $21 to $14.

From the Xbox One S, Microsoft is said to be training its sights on an even more powerful game console, called Project Scorpio, in 2017. In contrast, Sony's PlayStation Neo, scheduled for an October 2016 release, is being touted by the Japanese giant as the game console for use with virtual reality (VR) technology and mainstream VR experiences. Both the Neo and Project Scorpio are being seen as midcycle-refresh exemplars of current-generation game consoles, but each will be more powerful than its base model.

For more details on the Microsoft Xbox One S teardown, refer to the official press release from IHS Markit Technology, which also includes an exploded view of both the Xbox One S console and controller.

Kevin Keller, Senior Principal Analyst, Cost Benchmarking Services, also contributed to this analysis.

Andrew Rassweiler is Senior Director of Cost Benchmarking Services at IHS.

Posted 5 August 2016


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