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Let's not forget that Nintendo has to adopt a different business model to some degree, simply by virtue of the fact that it doesn't have another business to fall back on. Sony and Microsoft can finance their consoles, and in Sony's case a handheld as well, using profits from their other divisions. Nintendo's general conservatism with regards to risks and production costs reflects this.

For this reason even the GCN was profitable despite being largely obliterated by the PS2 in terms of hardware sales.