$699 PlayStation 5 makes no sense if it costs $450 to manufacture

UPDATE: Play Asia's PS5 listing has been updated. Price has been removed, and you can no longer pre-order the console.

A $699 PS5 is very, very unlikely for many reasons, but the biggest one is the system's estimated manufacturing costs.

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A new Play Asia pre-order listing prices the PS5 at $699. This is obviously a placeholder, and the console won't cost this much. It's simply too high of a price tag considering the console's estimated $450 manufacturing costs. Back in February 2020, production supply sources told Bloomberg's Takashi Mochizuki the PS5 would cost $450 to manufacture. The expensive GDDR6 RAM and PCIe 4.0 SSD flash memory make up $250 of that cost, or more than half. Given the margin of error and other costs, the PS5 is expected to sell at $500.

Considering most hardware-makers like Sony and Microsoft sell their systems at a loss and recoup costs in billions earned from software sales--Sony earned over $10 billion last year from software--the PS5's MSRP is likely to keep in line with the manufacturing costs.

$699 is simply too big of a risk. Sony has already restricted its total PS5 volume to 5-6 million from launch to March 31, 2021 due to higher MSPR. But $700 would push many gamers out of its reach.

A $700 PlayStation 5 is $300 more than a PlayStation 4 Pro, and a massive $400 more than a PS4 Slim. Sony would simply talk itself out of PS5 sales during the console's critical early adoption phases and cement the PS4 even more firmly in the PlayStation ecosystem.

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Also consider Sony is releasing two variants of the PlayStation 5: a standard version, and a digital-only PS5 Digital Edition that doesn't ship with a disc drive. This latter version may be up to $50 cheaper than the standard version.

This isn't the first time we've seen high PS5 price tags pop up.

One website claimed the PS5 would have an outrageous $1,000 price, and Sony quickly jumped in to refute this. Swedish retailer MediaMarkt also priced the PS5 at over $1,000.

More recently we have a purported Amazon listing that priced the PS5 at $599, which is still too high. There wasn't an actual clickable link--only a screenshot of a supposed listing. $599 is more realistic and in line with the manufacturing margin, but it's still pretty steep.

The reality is no one knows how much Sony will charge for the PlayStation 5. But we can make educated guesses and historical data, the games market, and how much each system costs to make. From where we sit, a $699 retail price won't happen.

The PlayStation 5 will release Holiday 2020. Check below for more info:

PlayStation 5 specs and details:

• Custom SoC with second-gen Navi GPU, Zen 2 CPU
• 8-Core, 16-thread Zen 2 CPU at 3.5GHz
• Navi 2X GPU with 36 CUs on RDNA 2 at 2.23GHz
• Ultra-fast 825GB SSD with up to 9GB/sec speeds
• Support for 4K 120 Hz TVs
• Ray-tracing enabled
• 8K output support (for gaming)
• Plays PS4 games, BC is on a title-to-title basis
• Separate games that ship on BD-XL Blu-ray discs
• New controller with extensive haptic and tactile feedback