Estimates suggest the Xbox One S manufacturing costs are around $324 per unit

Xbox One S
Xbox One S (Image credit: Windows Central)

Microsoft released the Xbox One S this week. Although the console doesn't contain wildly different hardware from its predecessor, it does sport some interesting new features. It packs overclocked memory and processing to support HDR visuals in games. It also features an IR blaster built directly into the front of the box and sports a fresh and compact design.

IHS Markit has torn down the Xbox One S' components and offered some estimates as to how much it costs Microsoft to build.

The Xbox One S costs around $324 to source and manufacture. This cost refers specifically to the 2TB model, which Microsoft sells for $399.99. While there are other expenses involved when selling consoles, it provides a margin of $75 for Microsoft to play with. While IHS Markit doesn't specify which Xbox One model they are referring to, a similar teardown they conducted back in March suggested that Microsoft was paying $300 per unit for the previous box, presumably for the 1TB model. It seems entirely likely that with matching HDDs, the Xbox One S is probably cheaper to produce over all.

The most expensive component in the Xbox One S is the CPU/GPU, costing around $99. IHS Markit notes that the price of the custom 16nm AMD chip should come down as the manufacturing process improves. The incremental cost reductions should eventually provide better margins or give Microsoft some additional leeway for Xbox One S sales and price cuts as we head towards Project Scorpio.

The new processor also requires less power than the previous console, which in turn generates less heat. The new processor meant Microsoft were able to not only shrink the console, but also pack the power supply unit directly into the box, eliminating the previous console's unwieldy power brick. Reduced cooling requirements meant Microsoft were able to shave $7 off the cost of the Xbox One S when compared to the Xbox One.

For more detail, be sure to check out IHS Markit's press release over here.

Every component in the Xbox One S seems like a design win. Getting favorable margins on a console isn't typically an easy feat, but the Xbox One S manages to achieve it while also becoming the most fully-featured and affordable UHD Blu-ray player on the market.

While Sony's PlayStation 4 'Neo' could steal the Xbox One S's thunder in the coming months, those who are invested in the Microsoft ecosystem will likely find the Xbox One S more than satisfactory for now. The 6 teraflop Xbox Project Scorpio is still on the horizon.

Jez Corden
Co-Managing Editor

Jez Corden a Managing Editor at Windows Central, focusing primarily on all things Xbox and gaming. Jez is known for breaking exclusive news and analysis as relates to the Microsoft ecosystem while being powered by caffeine. Follow on Twitter @JezCorden and listen to his Xbox Two podcast, all about, you guessed it, Xbox!

  • Why does that matter?
  • I found it interesting. :)
  • I guess it is, but three years after the original Xbox one was manufactured the probability of the cost of parts costing less is high so manufacturing cost may not be much more.
  • It will have had a totally new motherboard designed for the new location of the components so its not as simple as you are making out. Even though the specs are pretty simalar the thing totally diffrent with it comes to components (even the reduced dye cpu/gpu)
  • Because the X1S is being sold between 300 and 400. So they are actually losing money on the cheapest version sold.
  • We always want something for nothing right. When something cost more than we feel it should, we have fits and complain, now something is cheap we want to investigate why.
  • They easily make up the money that they lost if you subscribe to Xbox Live Gold for a year.
  • Yep, console business is all about selling games and subscriptions.
  • Yeah, because running their datacenters and all those free games don't incur any costs.
  • Of course there are some costs, but the margin is tremendous. I mean, they wouldn't give away free games and encourage people to subscribe if it weren't a money maker.
  • It's for the ppl in every Xbox thread that replys, "this should be $199..."
  • when you manufacture in bulk the cost goes way way doiwn, these estimates are price with profit on each component!, Plu a more i manufactured costs go les, hardware part i often cheaper much cheaprer tan what i said as 300$, the software, support and marketing costs are were there is goign to be a lot more spent per piece!
  • I wonder how much will the Xbox "Scorpio" and PS "Neo" will be. Posted via the Windows Central App for Android (LG V10 or Nexus 5x)
  • To hit their accounced 6-teraflop target, assume around $500. The current One S is $300 and a RX 480 is $200, and that's around the level of perfomance they're targeting. If you've read any reviews of that card, what you'll find is that anyone who thinks that the Scorpio is going to play games at 4K is kidding themselves.
  • Did Microsoft say that scorpio will be able to??
  • Yeah, that's the whole point -- a new system that will support 4K and VR. Similarly, before the name "Neo" leaked, the rumor mill was calling Sony's next system "PlayStation 4K." But, what a lot of people don't realize is that few games, if any, will run at 4K. Most will run at 1080p with improved visuals.
  • I agree they won't be running at 4K for all games personally, but I don't want them to necessarily. I'd prefer 60FPS in my console games tbh. Rather than 4K at ~30FPS. The great thing is the developer can decide what they want to do. More 60FPS games w/ equal or better visuals would be great. Maybe a console that can run Dishonored at 60FPS, they need a super definitive version for the Neo and Scorpio since they targeted 30FPS again for odd reasons. I got Rainbow Six Siege on Xbox One instead of PC because I just prefer a gamepad these days and I like to play online without a disadvantage against other PC players - The game is still good on console but it feels like it's running < 30 fps which is a bit jarring until I got used to it, I could run it 60FPS on PC but as I say I avoid multiplayer shooters on PC in general these days as I'm not great with KB+M through lack of use.
  • Did you just say an RX 480 is the performance target of Scorpio? Lolwut? The RX 480 is a mid-range 1080p max card, anything higher then 1080p is pushing it unless you want to dump down the settings.Scorpio is aiming for the ability to do 4k gaming which is going to require ALOT more grunt then an RX 480, we are talking GTX1070/80 levels of performance not a blooming RX480 -.-
  • Dude, that's what I'm saying! They announced that the Scorpio would be capable of "up to 6 tflops", and the RX 480 is right around 5. The Scorpio will be slightly more powerful, but not drastically. Even the GTX 1080 can't maintain 60fps at 4K in many current games, and that's like 9 tflops. There's no way the Scorpio will do 4K with AAA titles.
  • I wonder if Sony is going to make a ps4 "neo neo" to compete with Scorpio ♏
  • Doubt it, they don't need to.
  • PS4 Merovingian
  • I suspect it will be $1000 in Australia, I hope it isn't, but I suspect it will be.
  • The PS4K is expected to retail for the same price as the One S. So 400€. Thought it's not likely that Sony will offer any tiers since the hard drive on the PlayStation is user replaceable. The Scorpio won't be sold for less than 600€ though I'm counting it to go for around 800€. After all it will be a PC disguised as a console. Posted via the Windows Central App for Android
  • The Xbox One and PS4 are already PCs disguised as consoles. Each has a nearly identical x86 CPU/GPU from AMD. The Scorpio and Neo will share a nearly identical AMD CPU/GPU combo as well.
  • No, not really.  While they'll both continue to use an APU the speed differences between that and project scorpio specs seem too great for them to use the same generation of processor design from AMD. The current 'polaris' architecture is about enough for the neo, but not the scorpio which looks like it'll be using the 'vega' design, add to that the rumored release of Oct 2016 for the neo and over a year later for the scorpio which allows for a smaller process part (so less heat, faster clocks) and more dev time to tune things.  But really, who knows. Humerously, sony have leaked that they might make the neo use a 5.5tflop part and that this decision wasn't at all as a kneejerk reaction to the scorpio's 6tflop chip.  Funny stuff. I have a PSVR pre-ordered, it looks like the neo is targeting VR not 4K.  Its simply NOT going to be able to do 4k except in indi titles with typical indi-type graphics, no AAA game like Uncharted 4 is ever going to hit 4k/60 without a lot more grunt than even the scorpio has.
  • Scorpio may not even be an APU and it might not use AMD for the graphics in all honesty. They were quoting GTX1070 levels of GPU power which sounds ludicrous considering AMD aren't close to that yet. It's not like AMD have solved their efficiency/heat output either so in order to get that amount of GPU power it wouldn't be surprising to see some sort of special version of Pascal designed for consoles seeing as nVidia GPU's are extremely good regarding heat/efficiency.  
    it looks like the neo is targeting VR not 4K
    PS4K wouldn't be able to do 4K even if it tried. GTX1080 is required for 4K gaming at the moment, no APU exists with such capabilities and especially not the quantity or state for PS4K's launch which will most likely be early/mid next year maybe end of this year. It will simply be as the One S, able to play 4K video.
  • Amd can handle the nvidia 1080 with their newest dedicated gpus. They cant with an apu. But with apus or igpus u can not do that at all at the moment. But scorpio may even use zen then. We do not know yet.
  • Probably at $499 to start at least for christmas holiday season
  • But how much did it cost them in R&D and human resources to design and test it? Seeing as how they spent $100 million alone on the original Xbox controller (and then spent even more resources tweaking it two more times since then), I imagine the true costs of them making, manufacturing, testing, distributing, and promoting the Xbox One S are astronomical.
  • You acknoledge that, yet still complain LIVE is overpriced.
  • "Axe Body Spray, I have told you dozens of times on dozens of articles over several months to stop harrassing me, yet you continue to do so like the sociopath that you are. I have no respect for uneducated ignoramuses who mock the plights of disabled folk, defend anti-consumeristic crap pulled by multi-billion-dollar corporations, and have no understanding of basic logic. You're a terrible person. And I have no interest in anything you have to say. Take a clue and take a hike."
  • It's more or less the same console, nothing like releasing a VR headset which Sony says is profitable from day 1.
  • Sony says a lot of things about their consoles before they are released that never come true.
  • It says in the source link that R&D costs were lower than the original box I think, will have a look when I get back to a PC.
  • i think i will buy the 500gb model after christmas if i ever get around to buying a 4k TV
  • So much for the 7 year console cycle. I had my 360 for donkeys' years, it didn't matter that there were 4 iteration's of it because it was the console pinnacle no matter what size/colour/storage you had. I've had my XBone for 3 years and its about to be replaced next year by Project Scorpio. Im all for progress but dropping £500 on a console for it to be replaced so soon is a little annoying. If you compare an early title for the 360 to a much later game the difference is night and day in graphical quality and gameplay (im thinking something like Dead Rising 1 vs Alan Wake). Are Microsoft so sure that they've reached the max potential of the XBone already? Shouldn't they try to maximise the quality of title's they release for the current, first gen XBone and the new XBone S? Or do you think they will do a Sony and keep the XBone going for years in the background much like the never dying PS2, just ticking over getting ever cheaper but always making money?
  • I'm still using my PS2 to this day. Posted via the Windows Central App for Android (LG V10 or Nexus 5x)
  • The Scorpio isn't going to replace the Xbox One in stores it's going to be a companion device.
  • Only in theory will that be the case. After Scorpio is released, all game presentations, trailers, and demonstrations will be for the Scorpio. The original Xbox One and S will be treated like after thoughts; oh yeah, the games play on that other thing too.
  • The original xbox one will be replaced by the S, the Scorpio will be a fourth model, the cost isn't conducive to a mass market approach. It's going to be like the original Elite Console for the Xbox 360.
  • Or, for that matter, like the elite Xbox One console, which certainly didn't replace the regular Xbox One system.
  • But it didn't matter if you had a 360 elite, a 360 core etc. If you bought a 360 game you knew it would work on any version of 360. As for the scorpio, as PachecoCorporationCEO says will be at the forefront of everything and the One/One S will be an afterthought. Im asking if that's really fair to consumers or loyal fans who dropped big bucks on a One in the last 3 years? Maybe people thought "the Xbox and Xbox 360 had really long life cycles and they were the pinnacle during that time so I should be safe for a long time buying the One" - except they weren't safe, and its being replaced (I dont believe for a second the Scorpio and One S will run simultaneously).
  • And that isn't going to change, the games will still work on any device. Like I said the original One's are getting replaced by the S models (no different to last gen) the Scorpio is a flagship model, its high cost will mean it is targetted at heavier users. It's like saying that a 950xl makes the 650xl redundant, it doesn't, and Microsoft never intended it to.
  •   As it was said all games released will work across the full range of xbox one consoles, the only difference is that those with a scorpio will be running games at a higher resolution (up to 4k) with all the bells and whistles turned on and those with the Xbox one & One S will be running at up to 1080P with less bells and whistles, essentially what we get now. where I see the systems diverge is when dedicated VR titles get released due to the One/S not supporting VR. It's not like the devs are going to stop developing for the One/S modern games that are also released for PC are developed with higher resolutions and graphical fidelity in mind and then downscaled to run as optimally as possible on console hardware.
  • Games, apps, etc will be compatible with the Xbox One, Xbox One S, and Project Scorpio. The current system isn't being replaced, it is merely going to be part of an "Xbox family".
  • Scorpio is NOT replacing the current XB1 line. It is an enthusiast-level device, and will run alongside the current range. It's like saying that the "Surface Book replaced Surface Pro" when they're separate products aimed at different markets. MS have no intention of phasing out the XB1's and moving everyone to Scorpio. They would kill their platform overnight.
  • We all know what the marketing and comms said, but there is mo restriction on devs as to what they'll use the extra power for. In reality Scorpio running on non-4k could have massively better draw distances, effects, polycounts, numbers of NPCs and framerates, and you'll see a trailer for a game running on Scorpio because that's the best representation of it, but then get a fairly different experience on the original One. That's what I'm expecting, anyway.
  • That's no different to how PC works. In fact, you often see visuals for a game now that don't reflect what you actually get because the footage is from a different system. This includes consoles.
  • Exactly right... the in-game graphics will be from the best system money can buy, with every setting set to "ultimate". While the average home user might only be able to run them on medium or high settings. Microsoft are intentionally blurring the lines between Xbox and PC (they are the same beast under the hood anyway) so it makes sense that they offer similar options. I think things like the success of Surface Pro 3 and Surface Book show them that people ARE willing to pay for better quality and/or more power. The console market has always seemed like a "race to the bottom" to get the cheapest possible system that still performs well. Now they intend to offer a top-tier system, for people who already have the 4K tv's / monitors and want to use them.
  • It will be less like the PC world,and more like the mobile world. iPhone 6 plus users aren't getting left behind either when the iPhone 7 is released. They will say all apps work on both 6 & 7, but you get more bells and whistles... When you game on a desktop pc, parts are upgradable. Consoles are like laptops, there is only a replacement path,not an upgrade path. Ever tried gaming on a 4year old gaming laptop? The Xbox One S will give a similar experience in the same time frame. Consoles will cease to be a good longterm investment.
  • That's EXACTLY what I think Microsoft is going for. After all, they announced the Xbox One S and at the same time stated there would be a new and improved Xbox(Scorpio) coming out a year afterwards. So, two consoles in two years as in an yearly update. They have stated they don't care about selling the hardware per se, they just want people buying all those digital games and software. So, my theory is, the Scorpio will be priced for the people that want the latest and greatest. And dare I say, I doubt it'll have an Optical Drive. The One S already has the latest and greatest disc drive, so no need for another one. Also, I don't actually see them doing yearly updates, but I wouldn't be surprised if they had a new one come out every two years to keep up with the latest PC tech.  
  • I'll more likely keep buying that digital content if the games I'm buying will work on future consoles. Which sounds like what MS are going for when talk about it being the end of console "Generations"
  • @chuckdaly - well, you can upgrade the HDD in an Xbox... from Xbox Original, to Xbox 360, to Xbox One. Obviously it voids the warranty, and you need to jump through a few hoops, but it's quite a simple process. But there's not much else you could upgrade in there... I believe it's possible to swap out the optical drive, but that's only useful if it fails. It might be in the realm of possibility to swap out the CPU but I doubt it will be worth the effort.
  • Xbone? Is that the name of your big black ass dildo?
  • If you can keep playing games for another 3 years on the Xbox One / S then it'll work out fine. You can go for the console AFTER Scorpio. The exciting thing is that it sounds like from what MS are saying is we are at the end of console "Generations" which to me sounds like an aim to make it so that going forwards your games will just keep working. So hopefully the console after Scorpio is again just an upgrade and we will see all "Xbox One" games just working. If the console market doesn't go that way we have to keep relying on Backwards Compatibility for specific titles and may as well buy on PC where you can play your games pretty much forever - Once a game isn;t working on the current version of Windows it's probably old enough that it'll run in a Virtual Machine
  • My Lumia 640 won't allow me to delete this comment so im writing anything to replace the comment made in error. Please ignore this.
  • What's the construction costs for the PS4 if I might ask
  • Given the absolute crap Blu-Ray player used, I'd estimate it bit lower. Posted via the Windows Central App for Android
  • It seems most of people don't know how production goes. What makes you think that 324 would be an aproximate cost when MS are buying tons of components to sell their product worldwide? 324 maybe if you buy for one XOne S. The more MS buy the cheaper prices they'll get for each component. And if you're constantly buying components, factories would keep you the low price or even lower them. That's how it works. The profit rotates faster like that.
  • while also becoming the most fully-featured and affordable UHD Blu-ray player on the market
    You mean so fully featured it can't even output HD Audio as a bitstream, yeah it's definitely fully featured. That one omission makes it practically worthless as a UHD blu-ray player for anybody using more then just TV Speakers... It doesn't even bitstream Dolby TrueHD or DTS HD MA let alone Dolby Atmos, without that it's a joke as a UHD blu-ray player. MS better add this basic functionality in, even the current Xbox One can't output HD Audio via bitstream -.-
  • Monkeysaintfun is spot on. Plenty of PS3s sold due to it being a fully-featured blu-ray player. The lack of high rez bitstream audio is embarrassing. Hey, it's the MO of the Xbox division.
  • They can't even make basic BD-R discs play in it, let alone output HD audio. The original Xbox One Blu-Ray player was already crap compared to the one on the PS3 (the 3, yeah, not even talking about the 4). The Xbox One S unfortunately kept it the same crap and I have little faith Scorpio will fix that. The "most fully-featured and affordable UHD Blu-Ray player on the market" will be the PS4 Neo once it comes out. Microsoft will be once again beaten there and this time, it will be really absolutely entirely their fault. That's pretty much why I'm getting the PS4K once it's released, even though I had gone to Xbox in this generation (because I had no idea about the blu-ray player limitations...had I known it beforehand, I would probably have gone with the PS4)
  • Is it 100% missing? Somebody on here in the comments was claiming the Bitsteam option was there in settings - I've no idea though and don't use it personally