Did Microsoft just do what Nintendo was too afraid to do?

[Norris2k]

VitroBahllee said:

spurgeonryan said:

According to threads all over this site, the price of the X1 is dropping like Nintendos stock price.

After the 3DS price incident, Nintendo seemed to lose its nerve and left the Wii U price alone. But Microsoft saw a problem and fixed it. Is it that simple?

Good point. The thing that bothers me is Nintendo could have afforded to drop the price in order to maintain success. Maybe they saw how slowly they were able to make games and how quickly 3rd party support dropped off and concluded that being successful this gen would have put pressure on them to produce software they weren't prepared to live up to.

 

I own a Wii U and I am just trying to make sense of their strategy.

There are quite a lot of reason to not drop the price:

- you take a major financial blow. A 100$ drop is 1 billion $ of loss for every 10 millions console. An other way to say it is that for every user you sell with such a drop price you will make little or not profit for years. A more little price drop will give more little results but less financial blow. Moneywise, MS has 3 advantages : sale products other than games (VOD, applications, etc.), have a constant stream of money from the Live service, more money as a company. It makes sense to wait for a new cheaper SKU, that's what Sony did (cheaper PS3 without BC, etc., then a slim version).

- you estimate it would not change so much even with a lower price (Dreamcast, but also at some point the Gamecube) or worst will damage the product reputation (client trust, doom threads !).  They could be waiting for a game like MK8. See how the game impact sale, and anyway take the maximum of money at current prices. That's what MS did with Titanfall. Or they could go for a N64 approach, with a little but profitable market.

- You prefer to invest money on other things more profitable like 3DS, or game development. 

- You can't spend this money. Angry shareholders, need to show profit this year, or no money. For the latter, Nintendo do have money, but within 2 years they already used half what they saved in 100 years, as far as I can trust and read the cash flow tab here. It's important to note that the usable part of the cash flow is the free cash flow, and I don't think we can know what percentage it is for Nintendo. It's still a situation a lot better than Sony (or xbox if it had separated cash flows and results), but Nintendo is well aware that lot of companies just spent every penny of their huge treasure without result (any successfull and dead for hardware companies like Atari, Commodore, Sega), and that it took only a few years and mostly one single failed product.