In terms of their business, Nintendo is primarily a hardware maker. Yes, they spend a lot of resources making games, and they are the biggest software maker in the industry. But they are also the biggest hardware maker, and it is where most of their income comes from. If we use the Wii as an example, we will get the following chart:
| Hardware Total | Profit per unit | Total |
| 100.95 | $49 | $4,946,550,000 |
| Total Software | Royalty per unit | Total |
| 913.5 | $7 | $6,394,500,000 |
| Total income from hardware business: | $11,341,050,000 | |
| Nintendo Software | Publisher share | Total |
| 312.84 | $27 | $8,446,680,000 |
Note that their are a few assumptions made, first of all that the profit per Wii was/is $49. It was reported that Nintendo was making $13 in Japan, $49 in the US and $79 in Europe per Wii soon after launch. That may not be totally accurate, but it's a good estimate. Secondly, prices on both software and hardware get reduced over time... but the relative dollars should be at least somewhat consistant, and costs go down too.
But as you can see, in that chart 57% of Nintendo's business is the hardware side. The company themselves say it's about 65%. Further, the royalty revenue from software costs Nintendo virtually NOTHING, unlike the actual development of first party software. About 30% of their revenue simply comes from existing in the hardware sector.
Nintendo will never become a software-only company if they can avoid it. They will only do so if their hardware begins to mount massive year over year losses. Since the 80's they have been build on royalties as a business and will continue to be. Even if Wii U is a complete failure they will try again, simply because the royalty revenue business is too lucrative. And this is even before considering factors such as their own software getting a boost by being the "flagship" titles for the system, and other 1st party advantages.
I feel confident now that we will never see another "Nintendo should go 3rd party" thread for the next decade or so... right?
