Does the Wii prove that the HD razor/blade model is flawed?

[bdbdbd]

@Rol: I don't think GC was sold at a loss at any given time. There were R&D and prior to release distribution and manufacturing costs associated in the beginning, but that's not what's called "sold at loss".

Also, Sega has always been bad with financials. It's true that Playstation caused them to make a more expensive console, but what got them out of console business was their inventory of not sold consoles. By the time Dreamcast was discontinued, Sega had around 5 million Dreamcasts in their inventory. Since it was said DC cost 100$ to manufacture, they had half a billion worth of inventory with a revenue that didn't support the inventory that size. Basically all their money was put into the warehouse full of Dreamcasts (they should've burned it and get the money from insurance).

@KylieDog: You can speculate all you want, but what you're saying is, that the casual audience would be less predictable than non-casual audience. That i do agree to an extent, but when we are talking about generation change, i don't think we really can judge the future performance based on the predictability of the core audience. For example, Sony thought they could predict how the core audience behaves, and it got them close to being a non-factor in the console market from the prior market dominance.
Another good example of how you can't rely in the core audience, is Nintendos consoles sales between NES and Wii. After NES, up until Wii, Nintendo kept catering the core audience and that caused Nintendo to go nearly a non-factor in a market it once dominated.

Nintendo is tapping into three different markets with Wii; the core gamers, non-gamers and lapsed gamers. The split of casual and non-casual gamers in these groups is a different story that i'm not interested in speculating at the moment.

But the point is, that the people who won't be catered, won't stick around. If Sony and M$ takes the route Nintendo took this gen, they are facing the same problems. And also, if they can't expand outside what Nintendo did with Wii, they run into the same problem Nintendo did with Gamecube against PS2.

@Alephnull: I'm not sure are you serious or just trolling with the revenue, peripherals and the business model. Revenue is pretty much irrelevant measure in some things popularity. Especially when the talk is about profiting with products. The whole point is about selling stuff cheaper and still make bigger profit per unit sold.

In razor and blades model, the whole idea of selling at a loss is to have a price advantage over the competition. By selling the product at a higher price and still make losses is very badly done. If next gen, Nintendo sells their products with profit and competition is selling with a loss and higher price, they still face the same problem.