Put a fork in the Wii U, it is done. [Sensible discussion only, no flaming]

[Final-Fan]

Akvod said:

Final-Fan said:

1.  (a)  I don't care about Pachter's degrees, no appeal to authority fallacies from you please, especially when his ACTUAL area of expertise is stock analysis.  And even there his degree of expertise is pretty debatable from what I've heard.  But let me ask it this way:  Pachter is saying that Nintendo was selling a $150-costing console for $250.  That might have been understandable while there were shortages.  They'd just be throwing away money by charging less when they can't sell more units.  But what about later on?  Surely they'd have been able to drop the price more than they exhibited to keep Wii sales high?  Even now the Wii is selling for $130 -- a mere $20 less than its production cost was SEVEN YEARS AGO according to Pachter.  Surely, what with the universal falling cost of manufacture that consoles experience, Nintendo could afford to cut the price farther to prop up flagging sales if Pachter's estimate was true, don't you think?  Or is the Wii unique among consoles in having a rock hard cost of manufacturing that has barely decreased through an entire console generation? 

Perhaps more importantly -- if they really were making $100 per Wii from launch, where the hell do you and Pachter get off saying that Nintendo hardware is unprofitable?  I mean that's an INSANE amount of profit they must have been making!  Shit, they must be refusing to lower the price just because of the scads of money they're raking in just on the boxes themselves! 

(b)  What are you basing that opinion about peripherals on?  Regardless, they will still sell many tens of millions of controllers. 

2.  (a)  It's hard to say how much Nintendo franchises benefit from the hardware control I spoke of.  But I would argue that in the long run, it is more beneficial to keep the franchise strong than to pursue the short term gains of going multiplatform, only to see your franchise suffer and see declining sales because of declining quality, rather than continuing strongly into the future.  In this scenario, in exchange for a smaller market they gain reliable customer support.  Look at Sonic. 

(b)  If I were to speculate, I would say that the difference between having to support a console, but not having to pay royalties and also receiving royalties from third parties (which believe it or not do exist on Nintendo consoles), may or may not be equal to not having to support a console, but having to pay royalties, but having access to a greater market; but that when you take into account not only the hardware factor I refer to elsewhere (and possible franchise degradation if hardware control is lost) but also brand unity/recognition, it is at least equal. 

(c.)  Au contraire, the point of "propping up" a console is discussed in great detail.  You can argue whether it is fully justified given the alternatives, but to claim there's "no point" is just false. 

3.  Aside from the effect it had on existing franchises (and I'd remind you of Super Mario 64 and the analog stick, which acknowledging that there are people like RolStoppable who would argue that that was also detrimental to the franchise), it gives Nintendo opportunities to do NEW things like Wii Sports, WSR, and the Trauma Center series which (as a non-player, I understand) relies on touchscreen or Wii Remote drawing for its gameplay.  Making new franchises as well as continuing old ones is, I'm sure you will agree, essential to the health of a software company. 

1)  You haven't even proven that the Nintendo hardware and hardware-based business is unprofitable.  Aside from that, I will concede that if you are only analyzing the hardware for the hardware's sake, then it isn't relevant to that analysis how much the hardware helps the software. 

2)  On the other hand, I think it's quite a remarkable claim to say that "Dictating hardware-->better software" has no relevance to Nintendo's software business.  I mean frankly that's a completely ridiculous statement.  What I suppose you mean is that the quality argument is trumped by the quantity argument of being able to release across two platforms (not three, unless you forsee a new entrant into the market).  But IMO that is a shortsighted outlook because over time series of inferior quality dwindle and fade away, if not disappear entirely. 

4.  In conclusion, simple logic isn't necessarily correct logic.  And I have better things to do than to do 100% of the factfinding while you don't have the same burden, especially when you (and Pachter) are the ones making the claim in the first place that Nintendo would be smarter to abandon their hardware business.  The burden of proof is on you IMO. 

1.  (a)  Stock analysis requires you to understand the company's business you know? What exactly do you think stock analysis entails?  Also, lol "appeal to authority fallacies". Did you just read Wikipedia's article on logical fallacies or something?

Point is, is that Pachter actually reads 10-k's and other, exclusive, sources of information and talks to management as well as journalists. He's a fucking expert, and I find it hard to believe that he's just pulling numbers out of his ass.  On the other hand you just make claims while even admitting yourself that you have "no data".  Knowledge isn't a perfect or surefire thing. Given the limitations, I'm going to believe Pachter over you.

[As for the Wii's mfg. costs], dunno. Can't really say anything about the costs at this point in the generation, since I have no knowledge about that.

But as for not cutting the prices: 1) A few years ago, when the Wii was still selling a lot, it would have been stupid to cut prices and lower MARGIN. 2) The price they have now could be based on a number of stuff. They might have an idea of what the current demand of Wii is, and determined that the current cost maximizes profit (which is a function of volume and margin). It might be that costs can't be lowered anymore.

I'm not really sure where exactly you're going with this though.

(b)  From what I've seen, Nintendo has mainly been marketing the WiiU as 1 GamePad+a bunch of Wii motes. Going off of what seems to be Nintendo's marketing (and therefore, business strategy), I just don't see Wii motes being sold as much, given that current Wii owners should already have some.

Maybe they'll sell the GamePads? I don't own a WiiU so I'm not sure if there's support for multiple GamePads (are they even being sold individually)? But it just doesn't seem like something that'll have a lot of volume in terms of sales (or appeal).

2.  (a)  I think the Sonic brand really didn't fail as a result of a lack of exclusive hardware, but just poor quality software.

(b)  Christ that's a long sentence (also a lot of "buts"). Sorry, I didn't really follow what you wrote there.

3.  Sure, but does that really get people to pay a premium for the console? WiiU seems to show that people aren't. Is it worth having those controls if that means that you can only sell to one platform? It just doesn't really make sense for a hardware or software point of view.

1) 

2) 

4.  Watch the video again. Don't stop inbetween it. Just take a deep breath, and understand that he's just about business. You could say that Nintendo's more focused on "quality" or "artistic integrity" or something like that. But Pachter's points are simple.

Nintendo's not making enough money on hardware, Nintendo could make more money on software.

1.  (a)  Disregarding your worthless personal attack, I would like to take this moment to challenge you on Pachter's claim that Nintendo made $100 profit on Wiis at launch.  Please find one scrap of evidence or reputable source corroborating this claim.  My point about the Wii's current price is that it is only down to $130, and the Wii's sales are seriously flagging.  I think it's reasonable to claim that if Nintendo could boost Wii sales by dropping the price they would do so; they aren't; therefore they can't.  And I think it is a very dubious position to hold that the Wii's cost of production was $150 seven years ago and has dropped so little that Nintendo feels it can't afford to charge less than $130 for it now. 

For a more concrete rebuttal of the claim, here's a 2008 destructoid article claiming the Wii made $6 profit per unit, and a contemporary article giving the MSRP of the Wii as still $250.  Now unless I have made some sort of error in identifying these articles, it looks to me like you have a choice between taking Pachter's word over that of Destructoid and Forbes, or believing the Wii got MORE expensive to produce, or admitting Pachter is full of shit. 

2.  (a)  I was referring to Sonic having a decrease in quality, reputation, and sales -- a fate Nintendo would obviously wish to avoid for its own flagship titles. 

(b)  Sigh.  Let me try again, using some mathematical grammar instead -- using parentheses to help identify where clauses begin and end.  "I would say that (having to support a console, but not having to pay royalties, while also receiving royalties from third parties) may or may not be equal in direct cost/benefit to (not having to support a console, but having to pay royalties to the console makers whose systems they publish on, with the compensation that the other consoles make up a larger market than the old Nintendo console market); but that when you take into account indirect effects like the hardware factor I refer to elsewhere (and possible franchise degradation if hardware control is lost) and also brand unity/recognition, it is at least equal and very probably better to maintain a hardware presence.

(And I'd also like to note that the royalties calculation should also include all of what they get through their online offerings -- eShop etc.  This is a substantial revenue source available to the console makers, whose full potential has not been explored, which they would obviously lose out on by dropping out of the console market.) 

3.  It does make sense if it helps keep the franchises going strong forever as well as create new ones.  You need to argue that the legendary strength of Nintendo's flagship franchises is completely unrelated to its control over its hardware.  I await your arguments on that point. 

2)  You didn't respond to this one at all, but that's OK, just fold it into the main point 3. above. 

4.  I did watch the whole thing.  Firstly, as long as Nintendo is making money on hardware, I don't see why they should give up a small profit just because it isn't a huge profit.  Secondly, I think Nintendo's software business benefits from its hardware business, so dropping the hardware to focus on software could well be counterproductive.  Pachter talks about the ridiculous pile of money Nintendo is sitting on while being very dismissive of its ability to continue to profit, which IMO is a pessimism that has yet to be justified.  Stop embedding that video.  I'VE WATCHED IT.  I understood the words he was saying the first time around, thanks.  Watching it ten more times isn't going to change my mind.  Simple doesn't mean correct.