What beef up the Wii's cost is mostly the disc drive. It's a custom made mini disc/large disc drive with protection.
Also they've been using the same manufacturing process since launch because of the supply issue, which means they couldn't cost reduce very much. Likely their profit has grown but not by much. At launch it was ~ 49 dollars in the US, 73 dollars in Europe and 12 dollars in Japan, with each unit sold not counting marketing.
With marketing, which is how most companies count profit, the Wii was at about $6 per unit. Late 2009 they adjusted their manufacturing to 65nm finally(it had been 90nm since 2006 due to supply issues). Which means they dropped cost a little, which allowed them to pricedrop without losing money or too much profit.
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