I think you're severely exaggerating the drop of other currencies against the Yen:

http://finance.yahoo.com/echarts?s=USDJPY=X#symbol=USDJPY=X;range=2y
http://finance.yahoo.com/echarts?s=EURJPY=X#symbol=EURJPY=X;range=2y

I see more like a 20-25% drop, not 40-60%.

@mm
well, I did supply a price list for the wii parts somewhere in the OP.
Also, looking at the costs going down 45%, and inflation going up 45%, they are only making about 6$ per console. which means that at launch they were probably only making around 6$ per console.

The one thing people tend to over look is that even if sales 'slow' for the wii, they would still likely be seeing the highest sales of the 3 majors (assuming that the ps3 sales figures see the excepted post price cut dip). In fact, if nintendo never sold another wii, it would still be considered a huge success.

If true, then it's Nintendo who exaggerated, not me.

“From the Wii launch in December 2006 to December 2008, the value of the Pound fell by 43 percent against the Yen,” a spokesperson said, adding that in the same two years the Dollar and Euro fell against the Pound by 22 and 18 percent respectively."

http://www.edge-online.com/news/103/nintendo-denies-wii-price-cut-plans

Price of wii in britain also went up 20 pounds.
http://www.electricpig.co.uk/2009/03/12/nintendo-wii-price-goes-up-in-credit-crunch/

OK but the pound represents a single country, not that big a deal.

Well, that was Nintendo's entire reason for not dropping the price.
Profit per console has been estimated at 6$, so either the savings for manufacturing is a lot less than 45% due to leaving out the details (only the cost of the console itself, and not the cables, controllers, boxing, and so forth), or Nintendo is telling the truth when they say exchange rate is harsher than we imagine.
Or the 6$ profit estimation is wrong, which is doubtful. It can be off by maybe 5$ at most.

It's a good analysis, certainly. $9 for that CPU though? Damn.

Though i thought the situation against the Yen was improving as of late.

There are a lot of "could have" and "probably" in this. No volume discounts? That's laughable. Of course there are. Manufacturing costs go down as volume goes up, and it would be imperative for a manufacturer to keep Nintendo's business. Once you're in with them, as a supplier, you're "preferred" and will have more opportunities.

Then you go on to suggest that somehow Sony would have dropped prices more if they sold like the Wii has? Why does it work for them, but not Nintendo?

Gotta love the armchair analysts.

@the2bears

I thought I explained it well enough but I guess not.
Nintendo is the only one responsible for the volume. Unlike pre-mainstream materials, like the BluRay laser, and the cell processor, Nintendo is most likely the only company that still uses it's processor on the same kind of scale.

So, when Sony sells 30M ps3s, the demand is not just from Sony, it's from every BR manufacturer.

Next time, save your insults. There's no need.