Chark said:
Play4Fun said:
Chark said:
Play4Fun said:
Controllers are sold for really, really high profit margins at retail. Just because it may be sold for $150 at retail doesn't mean it adds $150 or even $100 to the console bundle.
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Yes and no. There isn't a set in stone profit margin that controllers have. They have just been used as an effective means of obtaining profit. At $150 the price is substantially more than a typical controller. Considering that price might place it out of consumer interest profits might be maximized by lowering the profit margin to encourage sales (supply/demand). Though I suppose they don't anticipate sales to occur unless in the case of a replacement. With a $150 price tag it is looking as if the controller is significantly more expensive than a typical controller. Even maintaining the same profit per unit would indicate an almost $100 price on top of a typical controller.
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I never said or implied that the gamepad doesn't cost more to produce than a typical controller nor did i say/imply that there is a set in stone profit margin for controllers.
I agree that $150 would put it out of consumer interest in America/europe which is why I think it's smart that Nintendo are not selling them seperately at retail outside of Japan until 2013.
My post was aimed at posters who seem to think it would add $150/$100 to the console budget.
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Well that's the thing, it might be adding $150/$100 to the console's cost. We can't really tell, because profit margins aren't set in stone. I wasn't sayin you thought they were. The gamepad could be $150 as an attempt to provide a profit source for Nintendo, or it could be $150 because the price of the controller is high and therefore a lower price would sell at a loss. It is hard to judge the gamepad because there aren't good comparisons to work with. We will have to wait for a tear down, which due to its uniqueness and high price will happen in conjunction with the Wii U teardown.
The gamepad's high price is an idication that it has a high production cost at the moment. Controller profit margins are normally considered high. At $150 it indicates the cost of production is almost three times as much as a typical controller. Since it is so expensive there is good reason to believe the profit margin is lower than a typical controller, meaning that the gamepad's production cost could be well over three times the cost of a typical controller. This no doubt is a contributing factor to the overall production cost of the Wii U and could explain why it is selling at a loss.
On the bright side, Nintendo has essentially two expensive compenents in the Wii U, the console and the controller. Reducing the cost of production will fall on both compenents, allowing for a faster overall price reduction as opposed to a product relying on only the console's parts to become cheaper. The Wii U will, in my mind, without a doubt be profitable next year with a flexibility to have a price drop if needed depending on the competition/sales.
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The gamepad doesn't use any cutting edge parts. There are tablets out there with more components and better screens in them than the gamepad that cost less than a $100 to manufacture.
That's why i don't think it adds $100 or more to the console.
The gamepad's $150 price isn't really an indication of a production cost of around $100. That's what I'm arguing. Back in 2006, for example, we got a report that Xbox 360 controllers cost $11 to manufacture, yet they are sold for $50/$40 even today.
WiiU gamepad cost more to make than an average controller, so it will be sold for more than an average controller at launch, but I am as certain that it still has a high profit margin as i am certain that it costs less than $100 (i'm thinking around $50) to make.
