"N"ext Revolution?

[sc94597]

ICStats said:

sc94597 said:

Firstly, Nintendo has  consistently made more revenue from hardware than software, even in 2013. 

http://abload.de/img/hard_soft_revj3ptw.png

That in addition to the knowledge that Nintendo has  always made a profit up until very recently (low Wii, Wii U and 3ds sales; high software, hardware and investment R&D), allows us to conclude that software sales have never made up for hardware costs, including hardware R&D. 

Ofcourse hardware makes more revenue, but revenue != profit.

Games can make up to 70% gross profit, and hardware gross profit is usually in the range of +/- 5%.

~$4.0 Billion Hardware Revenue = +/- $200 Million gross profit on hardware.
~$2.2 Billion Software Revenue = ~$1.54 Billion gross profit.
Approximate total gross profit range is $1.3 ~ $1.7 BIllion.

Actual Nintendo gross profit reported in last FY?  ~$1.6 Billion so the estimate is right one the money.

~95% of Nintendo's gross profit comes from software.

Way to pull my quote out of context. I never stated that higher revenue => higher profits from hardware. The revenue statement was one in a sequence of arguments presented in my post to argue the likelihood of at least 0% gross profit (breaking even.) In fact, you are arguing my point now. A +/- 5% profitability on hardware is quite similar to saying that hardware research and development costs  are at the least covered by hardware sales. That was the point of my post. Now if Nintendo can reduce its software costs by producing hardware that enables that, it is a no brainer. Software sales will be more profitable on their hardware than their competition's. For reasons I illustrated: lower costs, saturatation of targetted consumer base on one platform, etc, etc. So what are some opportunity costs Nintendo forgives when it only produces software on its platform? A larger userbase to sell games to, and that is about it.