I agree with Shams here -- I'm not sure why growth would slow.

They'll sell about as much hardware next year as this year -- perhaps more, we'll see -- and will sell considerably more software simply because the install bases have grown.

Why would profits stop growing? The next time I expect profits to shrink is 09, when the DS is slowing down and a successor is on the way late in the 09 year or in 2010.  Hardware transitions will slow down profits. Not actually cause losses -- Nintendo is always careful to avoid that -- but certainly slow profits down. 

Yeah, all the profit is in software and with a vastly larger base, software should increase significantly.

@OP: Shocking...

I can smell Nintendo's next system's power... and it smells good...

Have they used any of the money they have made at all?

If you assume that Nintendo can make profits of this scale for the entire generation, when they start the next generation all of their software development costs could be covered by the interest off of the money they made this generation.

 Yeah.  That's why the first thing you learn in Buisness 101 is that dropping your price to increase market share is almost always a mistake unless you are desperate. 

You almost never pick up enough volume to make back the profit your losing.  You usually end up increasing your revenue but hurting your profits.

The only advantage is that your opposing companies lose revenue.  It's a little different since in videogames since you also make money off the software, but it's pretty likely Sony's overagressive loss leading strategy seriously hurt their profit in the PS2 era.

They need to used that money to give us the ultimate console, With HD Graphics, AAA third parties, and a nice control innovation... and then they will have the 100% of the market... GO NINtendo!!!!!!!!

All this profit means they can invest into making the most awesome Zelda ever... Well that's what I hope anyways!

lolita said: All this profit means they can invest into making the most awesome Zelda ever... Well that's what I hope anyways!

 Stop teasing!