Nintendo Wii Costs $160 to Manufacture

[RedDragonXXX]

Toyo Economics TK news-paper has published teardown analysis of the Nintendo Wii game console, according to which each unit of the game machine costs Nintendo as much as $158.3. The news-paper states that ATI-developed code-named Hollywood graphics processor costs $29.6, IBM’s custom Broadway microprocessor takes $13 to be delivered to Nintendo, $31 is paid for Matsu****a-made optical disc drive, memory array costs $7.80 and power supply unit stands at $11.30. Nintendo reportedly pays Foxconn Electronics $19.50 for Wii assembly, reports WiiInside web-site.


Source (http://www.guru3d.com/news.html)

[Niku-Sama]

i was just reading that, i also saw the blurb with in the article about "nintendo may be making a profit which is rare in the console market" which is only the fact since sony and M$ came on the scene.

does it really make sence to make something to lose money on it?
by the time it doesent cost a fortune to make the parts they might be able to break even before the next generation if they can even do that.

so silly any more

[benbaked]

does it really make sense to make something to lose money on it?


Supposedly they make the money back on the prices of the games and accessories. Plus the online gaming services, tech support, etc.

I guess they're making enough of a profit to cover the R&D and manufacturing costs otherwise they wouldn't be doing it.

[Niku-Sama]

but sonly and M$ lose money on all that, thats what i am getting at.

nintendo is making money and thats what makes sence

[SolidxSnake]

factor in wiisports, and it probably gets somewhat higher. As well as packaging and such. Probably somewhat near $200-$210 in total. I remember hearing Ninty makes $40 off each console.

Which is HUGE, btw.

[deception``]

but sonly and M$ lose money on all that, thats what i am getting at.

nintendo is making money and thats what makes sence

It is not uncommon for a company to take a loss in a product in an effort to gain marketshare. It's called the loss leader strategy:

The strategy of offering a product or service at a considerable discount and loss of profit in order to attract future business.

A common practice when first entering a market, a loss leader's job is to introduce new customers to a service or product in hopes of building future relationships.


Microsoft has been willing to sell their first two systems below cost since they face the monumentous task of stealing Sony's recent thunder in the console industry. In many cases the Xbox and current 360 probably would not have sold as well if these consoles were retailed for a profit.

Sony is taking a loss on the PS3 because there are so many expensive components, namely the WiFi and Blu-Ray. We all know the PS3 costs about $800 to make - who do you think is going to be willing to pay such a price for that system? Even at $600 (which is a steal given what the thing does) it's a lot to ask the average consumer to pay.

Lastly, remember that both Microsoft and Sony are producing systems that are far more powerful than the Wii. Most of the Wii components are not bleeding edge, so manufacturing efficiencies are high, defects are low, and there should be absoultely no reason why they cannot turn a profit on each console sold.

deception``

[z0n3]

but sonly and M$ lose money on all that, thats what i am getting at.

nintendo is making money and thats what makes sence
I think you guys aren't getting what nik is getting at. After the cost to make the console, after selling the console, after selling games, after selling acccessories, and after all is said and done Sony and Microsoft both were in the red last generation. They did not make any money. They lost money. Game sales did not put them in the black. That is about as simple as I can put it.

[genghisjohn]

I think you guys aren't getting what nik is getting at. After the cost to make the console, after selling the console, after selling games, after selling acccessories, and after all is said and done Sony and Microsoft both were in the red last generation. They did not make any money. They lost money. Game sales did not put them in the black. That is about as simple as I can put it.

Cite your source please. I was aware that Microsoft lost money on Xbox, but I'm pretty sure Sony has made money on PS2. Especially after over 100 million sold.

Edit: Sorry about being off topic.... I'm tired.... and I got a speeding ticket tonight. I guess if nintendo can make a profit and still gain a significant market share, more power to them. IMO, I think that they should sell the Wii at $199 though.

[z0n3]

No source. Just clearing up what Nik said. Personally I hope Sony doesn't make a profit because I hate their business practices.

[Daleon]

Sony made a freaking fortune on the PS2, were talking country level GNP's. The PS2 pretty much became Sony's business. I think it was something like 70% or more of their profits. They went from a electronics company that brought us the Walkman and great TV's to a video game company just because they made SOOOoooo freaking much money off the thing. Thats why they can afford to risk the PS3's losses in hopes it becomes as big a cash cow eventually.

M$ is made of money. They have over 30B sitting in the bank in cold hard cash and a TON more in assets. Even a few hundred mil a year in losses doesn't seriously dent their performance sheets. They've always considered the Xbox as their way into the living room of consumers. With the HD-DVD drive and downloaded video content they are getting their. They know theres money to be made in that market so the losses are nothing to them either.

I always figured it costs them around $150-160 TOTAL for the Wii. Remember it only costs about $205 US in Japan (doesn't come with Wii-Sports) but thats software. Software doesn't cost them jack except for development which obviously Wii-Sports didn't cost them a fortune. Plus they get to sell it as a standalone game in Japan for full price and its one of the biggest sellers ofcourse. So they still rake in the profit on the combination from Japanese buyers.

[Shell]

You forgot about the price of the controller, online service, shipping, packageing, the other stuff that it comes with.

Nintendo does make green off the Wii, but look at the Mac...

[Daleon]

I thought that to, but total up the internal parts he listed. It comes to $92.70
so that leaves still quite a bit for the wii-sports, wii-mote, nunchuck, packaging, and shipping.

[OC Noob]

I think you guys aren't getting what nik is getting at. After the cost to make the console, after selling the console, after selling games, after selling acccessories, and after all is said and done Sony and Microsoft both were in the red last generation. They did not make any money. They lost money. Game sales did not put them in the black. That is about as simple as I can put it.

You are kidding yourself if you think Sony didn't make money off the PS2. In fact I'm sure they made enough cash to buy Nintendo several times over.

Both methods can work very well if done right, just because MS made a stupid mistake using PC hardware doesn't mean Sony lost money on its hardware the entire genertaion and didn't make any loses up a 1000 fold over the last 6 or so years.

The 360 will make money if people continue to buy it and we will see how well the PS3 price is accepted to see if it will make money (blueray and cell being the downfall if there is one).

The Wii is making money and if the Wiimote doesn't end up being a gimmick in consumers eyes it will continue to, but if iterest in the Wiimote does taper off the system will be much worse off then the GC because it will have absolutely nothing to offer other than crusty looking 1st party titles.

There are pitfalls to any stratagy.

[Niku-Sama]

I think you guys aren't getting what nik is getting at. After the cost to make the console, after selling the console, after selling games, after selling acccessories, and after all is said and done Sony and Microsoft both were in the red last generation. They did not make any money. They lost money. Game sales did not put them in the black. That is about as simple as I can put it.


thank you i was trying to say that but i just couldnt do it. too many words get in my way making things hard to explain.

[RedDragonXXX]

I think you guys aren't getting what nik is getting at. After the cost to make the console, after selling the console, after selling games, after selling acccessories, and after all is said and done Sony and Microsoft both were in the red last generation. They did not make any money. They lost money. Game sales did not put them in the black. That is about as simple as I can put it.

Didn't make any money?

If anyone didn't make money last gen it's Nintendo. M$ and Sony cleaned out, especially Sony with PS2 which has been the best selling console for year and it still might be. Xbox has millions of subscribes just on Xbox Live and that's not counting all the money they have made on games.

Sony revenued more then $250 million (http://ps2.ign.com/articles/087/087394p1.html) on a first day when they launched PS2.

[OC Noob]

Didn't make any money?

If anyone didn't make money last gen it's Nintendo. M$ and Sony cleaned out, especially Sony with PS2 which has been the best selling console for year and it still might be. Xbox has millions of subscribes just on Xbox Live and that's not counting all the money they have made on games.

Sony revenued more then $250 million (http://ps2.ign.com/articles/087/087394p1.html) on a first day when they launched PS2.

I don't know about the other stuff, but the PS2 is still the best selling console, although its outsold by the DS, but strictly speaking of consoles, the PS2 is still cleaning house at 500k+ sales last month.

[funnyperson1]

Microsoft definitely lost money on the original Xbox project as a whole.

http://www.forbes.com/home/technology/2005/09/12/microsoft-management-software_cz_vm_0913microsoft.html

Or if that's too much to read, heres the important part:
http://www.joystiq.com/2005/09/26/forbes-xbox-lost-microsoft-4-billion-and-counting/

Also they recently started making a profit on each 360:
http://www.techspot.com/news/23612-microsoft-makes-tiny-profit-on-xbox-360-hardware.html

The mistake that MS made with Xbox1 is relying on designs from Nvidia and Intel without getting the rights to the designs. This meant that they kept losing money because NV/Intel didn't lower chip prices enough.

Currently each PS3 is losing Sony $100+.