bbsin,

For handhelds the software/hardware revenue ratio was actually higher than for consoles in 2007, meaing that in the handheld business, software sales mattered even more for Nintendo than in the console business.

This certainly wasn't the case that much with former GameBoy generations, but the DS is a very strong software seller. Nintendo not only sold 65 million DS, they also sold 330 million DS games, which at $10 profit per game would match your estimation for DS hardware profits.

By the way, are you talking about $50-$65 margin, operating profit or net profit per DS? That's a hell of a difference. Nintendo's gross margin is above 40 %, their operating profit is above 20 %, their net profit below 20 %. If you say there's a $50-$65 margin for each DS sold, this would be around the Nintendo average (that includes both hw and sw), and if you say that there's a $50-$65 operating profit in each DS sold you'd be kind of unrealistic. That would put the hardware cost for one DS at $5-$20. Is that what you're suggesting?

The main problem with your position is that you can kind of guess Nintendo's expenses related to hardware production (through iSuppli) and then deduct their hardware profits, but no source tells you how much Nintendo spends per title on software development, so there's no way you can estimate their software profits and declare that they are lower than hardware profits.

The thing is, sony have had to recover from much bad press ove rthe year preceeding the release of the Ps3. Therefore thay had to invest more in the system through advertising and development costs so that they could increase sales to a profitable level. If they hadn't have spent that money, then they will not be making a profit over the next 4-5 years. Thats my opinion anyway

 Not at all, PS1 had the best business model of entire playstation familiy.

Nope. Nintendo strategy is to sell its hardware without loss so they will never be damaged by a failure but the ultimate goal of Nintendo is to sell its software on their platforms so they would not pay royalties to others ( like in period before Famicom birth). Do you know that Nintendo is the first ( or second ? ) publisher in gaming industry ?.

Nintendo , unlike MS or Sony or any other gaming company, is a software house where game designer design its own hardware ( this is the Nintendo Difference ).

A gamecube 1.5 will miserably fails in the marketplace.

The point is that Wii is not a Gamecube 1.5 . Wii is a console with a disruptive business model. Nintendo current business model is based on close sinergy between software department and hardware department that Big N has.

 Sega did this, but Sega was not a casual game company. They competed directly with MS and Sony (and failed because of it). Nintendo tries to as well with the 64 and the GC, but failed as well (although made good money at it)

The reason Nintendo does so well, is one, they deserve it, as they make very good games, and two, they are in a market all by themselves.

I had a thread on here somewhere talking about just that. Sony and MS are competing for market share. No one is in competition with the gamers Nintendo is going after, and thus they are destroying everyone else in sales.

While I do not own a Wii, and have no desire to ever own one, I think Nintendo's success is great. They deserve it, as they provide what millions of people want. 

It's funny, of all three companies, they are the one I respect the most, and at the same time provide my personal needs with the least products. I am just not into there games.  

Well, Sega had very bad managers ... Nintendo's managers too, made critical mistakes but always aiming to profits. In fact Nintendo always had profitable quarters in its history except for one ( due to unfavorable money fluctation ).

Yamauchi made Nintendo unlikely to go bankrupt ( although gaming industry is a tough one ) because he believe that is better survive to its own mistake than achieve success on first try.

So we have an insanely hugely profitable company with only 3,400 employees that has around US$ 9 billion in bank.

I really like my Wii, but I also like my Halo 3, Oblivion, etc., so I really like having someone push the state-of-the-art, and I'm willing to pay for it (well, not something outrageous like $600, but $400 wasn't *too* painful :).

I doubt the 360 will end up being "embarrassing" in NA.  I can walk into any Best Buy, GameStop, or CircuitCity and find more software and accessories for that platform than I can for PS3 or Wii.  Add to this the fact that many of the people working in those outlets really believe in the 360 as a platform, and it's difficult to walk out of a store with the impression that purchasing a 360 would be a bad idea.

This obviously doesn't hold true in Japan and some parts of "others", but the 360 appears to be firmly entrenched in NA.

Concerning loss of faith in brand, I just don't see that being true for most people.  Our favorite console last gen was the PS2, and we have a lot of games for it.  We owned a PS1 before that.  We never owned an Xbox or a Nintendo console (did own a ColecoVision a long time ago), yet now we own a 360 and a Wii.  I think some people really overestimate brand power when it comes to videogame consoles.  It's all about the games, which is why I think Sony made a mistake by removing BC from consoles in NA.

I believe another company has taken good advantage of that approach... Apple.