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ViktorBKK on 20 November 2013
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Aielyn said:
ViktorBKK said:
I only replied to them in the same manner I was being addressed. If that means getting banned, so be it.

You do understand what an economy of scale is do you ? If a company spends x millions of dollars on R&D for a product. That product could end up selling millions, even on a healthy margin, and still not meet the quota for the company to be profitable. 30m lifetime sales of a console enough for profit? Just NO.

So you have detailed information on the money that Nintendo spent on R&D for the gamecube, do you?

I don't think you realise that, when people talk about Nintendo making or losing money on a system, they're actually talking *total* costs. How does this work? Simple - the cost to R&D the GC might not be included directly, but if not, then the cost to R&D the Wii would be, and the costs would be proportionally similar... indeed, costs to R&D the Wii would be higher, since it was a newer system with new technology that wasn't found in the Gamecube (not referring to the CPU tech, but things like the Wiimote).

And the GC sold closer to 20 million than 30 million. And at 20 million, with a net profit margin of, say, $50, they're at $1 billion. More than enough money to cover the R&D costs. Of course, I'm leaving out details, but then, R&D on the Gamecube would have been well under $1 billion. And notice that I haven't even factored in the added income from games, accessories, etc.

In short, you are oversimplifying things, and then complaining that those that disagree with you are ignorant for oversimplifying in a different way. Except, their oversimplification involves ignoring the details and looking at the numbers, while you are oversimplifying by pulling "facts" out of... certain places that shall remain nameless. You have no data to back up your claim that 30 million units of hardware sold would be insufficient to cover R&D costs.

Profit per unit is always calculated without R&D. Most consoles don't sell at a profit until much later in their life cycle. Software and peripheral sales are what drives profit. Wii was an exception, it had near zero R&D costs as it was practically an overclocked gamecube, and Nintendo absolutely had to sell it at a profit because they were at a tight spot from the "successes" of  N64 and GameCube.

Your theory that Nintendo made 50$ per unit sold on the Gamecube is out of this world. In your world, Sega is obviously still manufacturing consoles.

And I don't need to oversimplyfy anything to state the obvious. 20-30m in the console business is not enough of an install base to cover anything. Some business models, like Microsoft's can be profitable with a smaller install base. But 30m is nowhere near enough.