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sc94597 on 12 July 2014
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HylianSwordsman said:
sc94597 said:
HylianSwordsman said:


Again, same logic applies here. What spare parts does an Xbox 360 have that wouldn't be cheaper to buy in bulk? The idea with this $75 dollar promotion is to get people to go to the Xbone in a way that lets Microsoft recover some of the costs by reusing spare parts. Nintendo could do the same. The difference is that Nintendo has more to gain from it since it would spread the word that the Wii U is a new console, and consumers have less to lose from it because the Wii U is backwards compatible.

The Xbox 360 at least has hard drives to reuse, the Wii has nothing. Pretty much everything is replaced with newer standards, and the technology is so specialized. But that isn't the point. Microsoft obviously takes a loss from this, yes, maybe a reduced loss if they can resell parts or use the parts in refurbished 360s, but a loss still. What  they gain is to prevent 360 owners from upgrading to a PS4 instead of an Xbox 360. That is all. Nintendo does not benefit from such a marketshare ploy. What you are basically asking is for Nintendo to reduce the price of the Wii U to Wii owners (which is essentially everybody who buys games) and then tell them about it, as the Wii has no components that would make up for a $50 price-cut (new Wii's sell for $100, used for as low as $40.) 

@bold HAHAHAHAHAHAHAHAHAHA! I wish! But seriously, no, that's just false. If it was true though, that just means this marketing tactic would work even better for them, since they'd have a bigger audience. Sounds great to me. But again, only if that were true, which it sadly is not.


That's just silly. Of course the Wii has parts that can be used again. Nintendo has done it for years. Parts can be recycled, you know. The used price is irrelevant, as Nintendo sees none of it, so that $40 used price is just what Gamestop paid the seller for it plus about $20. It was probably worth more than that in parts, or Nintendo wouldn't be selling them at $100, as that's only a small profit. You really think the vast majority of that $100 is manufacturing costs, and not parts? I doubt that. $50 would be a small loss at worst. If it's really that bad, how about just $40? Or $30? It's better than nothing, still enough to bring that Mario Kart bundle down to $300 or below. You can defend Microsoft's marketing ploy all you want, I'm not saying it's a bad idea. All I'm saying is that if Nintendo did it, it would help them, and they'd likely get more Wii>Wii U upgrades than Microsoft would 360>XBO upgrades. Even if they didn't, Nintendo would get much needed exposure for the difference between Wii and Wii U.

It is not clear whether or not a larger marketshare with a console that is a net loss will influence software sales so much that Nintendo will be able to make up for whatever loss on hardware. Since Nintendo tends to go the route of trying to make a profit in all areas, it makes more sense that their decision is to make a profit or reduce loss as much as possible, as is the case for any reasonable company. 

Again, which parts of the Wii can be used again, and for what system? The Wii's hardware is specialized for Wii's and Wii's alone, and any generalized hardware in the Wii (flash memory) is outdated. It is not like Nintendo has a recycling plant in their buildings in which they can melt down the components to their base alloys and use it to creat Wii U hardare, that isn't how it works. Nintendo outsources parts of their hardware to other companies (like ATI for example) and ATI supplies them with the goods. 

Since video-game hardware is an oligopoly Nintendo is not a price-taker, they are a price-maker. This means that Nintendo can arbitarily set the price to whatever they wish it to be, and because the demand market is relatively inelastic Nintendo's surplus is much higher. Just because the console is sold brand-new for $100 does not mean that the components must add up to a little bit less than $100. When a company creates a console they have an initial investment (fixed cost) and then they have a variable cost (as Nintendo moves on to other hardware this cost might rise.) Nintendo's costs might be the same, but that doesn't mean the demand is. At some point making Wii's will be unprofitable, and then Nintendo will stop. As it is now, Nintendo sells new Wii's as if their components were never used before. That means that the gpu, the cpu, the board, and memory were never fired up. That greatly increases the cost of the hardware because Nintendo must maintain their relationships with peers who are producing these components and allocate resources that can be spent elsewhere (on 3DS, Wii U) to keep manufacturing Wiis. That means they are giving up creating more 3DS's and Wii U's so that they can create Wiis. So there are many more costs involved than that of the individual components.

Lastly, you can't make the assumption that it will help Nintendo with basic knowledge of the innerworkings of their business. It might help Nintendo to have more Wii U's sold at a loss, because then their software sales might boost. But it might be that making a profit on the hardware is more profitable than any increase in software from a greater number of Wiis. Nintendo likely hires dozens of analysts to determine which route is a good idea, all while maintaining their ideal of making a profit on each individual component in their company. Microsoft has a different philosophy. Microsoft is willing to take losses if it means they have a chance to increase profits elsewhere. They are a much more risk-based company than Nintendo when it comes to profit-loss, and Microsoft has much more cushion to do this (with a dozen different products in a dozen different markets.) Nintendo being only a video-game company must always do things conservatively and focus on profit first and foremost, otherwise they'll die.