| FishyJoe said: One can play what if games forever if you discount real the real world, I'm not sure what that accomplishes. That being said, Nintendo's margins are in the low 20 percentiles. If the 360's margins were anywhere close to that they would have made a heck of a lot more money than they have. |
The What If kind of addresses that concern.
IF the 360 were selling that much hardware:
1. hardware costs will be less due to scale
2. r&d will not be as big a percentage of revenue - right now its 20% (for the whole EDD). Even you postulate the same percentage just for XBox platform - then if you use 20% on revenue of $16Billion, that would amount to $3.2 Billion in R&D ANNUALLY.
That does not make sense. That's basically a new PS3 every year. (sorry bad joke)
Nintendo R&D last year = $320 million
So of course R&D is less.
3. same for marketing, right now its about 15%(for the whole EDD). For $16Billion in revenue, that about $2.4 Billion.
In contrast, last year, Nintendo spent about $1 Billion in Marketing.
So it may make sense that XBox may be more profitable, if it has the same scale of business as Nintendo Wii. That's all.
Again, this is a WHAT IF scenario.
