Wii Production Costs Down 45%
It's 45 percent cheaper for Nintendo to manufacture the Wii than it was when the console launched, but just because Nintendo can doesn't mean it will drop the system's price.
The Wii's never been a particularly expensive product to manufacture, especially compared to something like the Cell-processor powered PS3. As any console warrior will tell you, "it's just two GameCubes taped together," and while they'll be silly for saying something like that, they won't be entirely wrong.
Now the Wii costs even less to make - Nintendo has cut its manufacturing costs by 45%, according to estimates made by Credit Suisse analyst Koya Tabata. Tabata suggested that the cheapening of the system could provide Nintendo with the opportunity to produce a low-cost model for emerging markets, but we here in the established markets want to know one thing: Now that the Wii costs less to make, will it cost less for us to buy?
That question might be especially relevant for consumers in the UK, who recently saw the Wii take a hike in price due to the declining value of the pound. Nintendo, however, doesn't see anything changing this situation, and told Edge Online [http://www.edge-online.com/news/103/nintendo-denies-wii-price-cut-plans] that "regardless of the cost price of manufacture, the decision to raise the [Wii's trade] price to retailers in the UK was taken due to the severe depreciation of the pound."
Even though the Wii lagged behind the PS3 in Japanese sales last month, arguably due to a shortage of software on the Wii and a number of new notable titles on the PS3, Nintendo's not going to drop prices as long as people are buying. If Tabata's on the money, then we may see the profit gained by cheaper costs offset lagging sales, if there are any. Either way, whoever at Nintendo figured out a cheaper way to tape two GameCubes together has just earned a promotion.
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It's 45 percent cheaper for Nintendo to manufacture the Wii than it was when the console launched, but just because Nintendo can doesn't mean it will drop the system's price.
The Wii's never been a particularly expensive product to manufacture, especially compared to something like the Cell-processor powered PS3. As any console warrior will tell you, "it's just two GameCubes taped together," and while they'll be silly for saying something like that, they won't be entirely wrong.
Now the Wii costs even less to make - Nintendo has cut its manufacturing costs by 45%, according to estimates made by Credit Suisse analyst Koya Tabata. Tabata suggested that the cheapening of the system could provide Nintendo with the opportunity to produce a low-cost model for emerging markets, but we here in the established markets want to know one thing: Now that the Wii costs less to make, will it cost less for us to buy?
That question might be especially relevant for consumers in the UK, who recently saw the Wii take a hike in price due to the declining value of the pound. Nintendo, however, doesn't see anything changing this situation, and told Edge Online [http://www.edge-online.com/news/103/nintendo-denies-wii-price-cut-plans] that "regardless of the cost price of manufacture, the decision to raise the [Wii's trade] price to retailers in the UK was taken due to the severe depreciation of the pound."
Even though the Wii lagged behind the PS3 in Japanese sales last month, arguably due to a shortage of software on the Wii and a number of new notable titles on the PS3, Nintendo's not going to drop prices as long as people are buying. If Tabata's on the money, then we may see the profit gained by cheaper costs offset lagging sales, if there are any. Either way, whoever at Nintendo figured out a cheaper way to tape two GameCubes together has just earned a promotion.
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Sorry if you got the wrong end of the stick.