The Xbox One costs Microsoft around US$471 (S$590) to build according to IHS analysts, meaning that there's little to no profit made per console once you take marketing and R&D costs into account.
That's US$90 (S$113) more than the US$381 (S$477) it costs Sony to produce the PS4, and if the estimates are accurate, both companies are expected to make a loss on the consoles for at least part of the following year.
They're hoping to make it up with games sales of course, and this teardown helps explain why the Xbox One's price is considerably higher than its PS4 rival.
It's all down to Kinect
Unsurprisingly, the Xbox One's bundled Kinect sensor contributes to the extra expense, accounting for around US$75 (S$94) of the total cost.
The biggest price tag however is the powerful AMD processor, which racks up US$110 (S$138) in costs.
4K Xbox One and PS4 console refreshes could land later this year