I would've upgraded the ram, processor, and GPU. I'm sure they're making more than enough off of each Wii that they sell at $250, so they could've upgraded these components quite a bit without going in the red. Considering that the GC and N64 were launched at only $200 and sold at a profit, despite having major hardware upgrades over their predecessors, then the Wii must cost well under $200 to manufacture. Why not make it perform a bit better, all the while still making profit? I think they could've made the system half as strong as the 360/ps3, and they could've still sold it at a nice profit at $250.
It seems to me as if Nintendo priced the Wii at what they thought they could get, rather than what it is worth, from a hardware standpoint. I must say that it has really worked out for them.
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