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Forums - Sales Discussion - Global Hardware Sales 02 December 2017

nemo37 on 04 January 2018
Intrinsic said:
RolStoppable said:

Such estimates are notorious for lowballing the real costs. For example, in 2011 the 3DS was estimated to cost ~$120 to manufacture. When Nintendo told investors that the price cut to $170 would result in the system being sold at a loss, you'd think that can't be true based on the estimates. But Nintendo's financials made it clear who has an idea of what they are talking about.

If estimates peg Switch at $250, then you can be sure that the real costs are higher than that.

You really believe that?

For the 3DS  I could even let that go cause tehere are a lot of custom parts in there.

But for the Switch? Not a achance in hell. Further more "Nintendo's finacials" has nothing to do with the true cost of manufacuring. As I said they could even be factoring in marketing costs or some sort of R&D made up charge they tack onto every unit sold true value. That doesn't mean the actual materials that it cost to make the hardware donesn't actually cost less.

And this isn't even like we are talking about some crazy cutting edge tech here using one off components..... everything in the switch exists in smartphones or tablets or some other mass production device. Gyroscopes,  IR or whatever.... 

Like how can you be fully aware that tablets with a camera, 2 - 4GB of ram, an SOC, wifi, internal storage and a 720p screen exist that costs around $50 at retail and still somehow believe that the NS cost Nintendo more than $250 to make? Like I don't even understand how that is possible. But as always lets just agree to disagree.

Just because the tablet you described costing so little (though I have never seen a tablet with 4GB of RAM costing $50; in fact, the only ones with 2GB that I saw were refurbished models at a liquidation centre) does not indicate much for the cost of the Switch. Not all components are built equally or priced equally. For example, a 720P AMOLED (used in some early-2010s Samsung products) costs way more than an IPS 720P display (used in Switch) which in turn costs way more than a 720P TN panel (and there are even variations by manufacturers between each type). Another example is the SOC, the SOCs in those cheaper are typically provided by Chinese companies like MediaTek; these SOCs are nowhere near as powerful as a Tegra, not to mention MediaTek operates on far lower margins than Nvidia (ie Nvidia is likely to charge more for its products). The 3DS, which contained far more older components (many of the 3DS's components including its SOC came from the mid-2000s whereas many of the things in the Switch come from 2015, like its SOC and WiFi chip) and yet it was selling at a loss when Nintendo slashed the price to $170 (btw companies do not factor in R&D cost, marketing cost, shipping cost when saying if a device is selling at a loss or profit; it is typically done by adding price - cost of materials - cost of manufacturing - Licensing costs/royalty costs); there is no way Switch in 2017 cost less than 3DS in 2011 to make. With that being said though, the cost of electronics depreciates as you sell in high volumes, so the cost of the Switch might have dropped at this point (again nowhere near $50 and most likely not even in the $100s). The 3DS, for example, was no longer selling at a loss by the summer of 2012 (most likely due to the being able to sell in high volumes previously).



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Pillertriller on 04 January 2018
OfficerRaichu15 said:
DonFerrari said:

A console selling better because it's better is one of the worst reasonings you ever saw?

Y’all really think Europe prefers Xbox One over the Switch? The software charts for countries such as Germany and France include a larger amount of Switch Titles than Xbox one Titles. The more software usually means more consoles that are sold. Also he needs to explain why it is better? 

Software is not the same like hardware lol, of course there is a larger amount of nintendo titles Nintendo Fans buying everthing with Nintendo in the name, so no surprises here



Intrinsic on 04 January 2018
nemo37 said:

Just because the tablet you described costing so little (though I have never seen a tablet with 4GB of RAM costing $50; in fact, the only ones with 2GB that I saw were refurbished models at a liquidation centre) does not indicate much for the cost of the Switch. Not all components are built equally or priced equally. For example, a 720P AMOLED (used in some early-2010s Samsung products) costs way more than an IPS 720P display (used in Switch) which in turn costs way more than a 720P TN panel (and there are even variations by manufacturers between each type). Another example is the SOC, the SOCs in those cheaper are typically provided by Chinese companies like MediaTek; these SOCs are nowhere near as powerful as a Tegra, not to mention MediaTek operates on far lower margins than Nvidia (ie Nvidia is likely to charge more for its products). The 3DS, which contained far more older components (many of the 3DS's components including its SOC came from the mid-2000s whereas many of the things in the Switch come from 2015, like its SOC and WiFi chip) and yet it was selling at a loss when Nintendo slashed the price to $170 (btw companies do not factor in R&D cost, marketing cost, shipping cost when saying if a device is selling at a loss or profit; it is typically done by adding price - cost of materials - cost of manufacturing - Licensing costs/royalty costs); there is no way Switch in 2017 cost less than 3DS in 2011 to make. With that being said though, the cost of electronics depreciates as you sell in high volumes, so the cost of the Switch might have dropped at this point (again nowhere near $50 and most likely not even in the $100s). The 3DS, for example, was no longer selling at a loss by the summer of 2012 (most likely due to the being able to sell in high volumes previously).

Ok, Let me just make this simple for you..... Take the ONePlus 5T. Snapdragon 835 SOC, 6GB of Ram, 4g LTE and Wifi Radios, BT 5.0, USB type C, 64GB of storage, 1080p AMOLED Screen costs around $299 to make. Is sold for $500. The same components (better with regards to the screen rez, same SOC, worse with regards to amount of Ram) used in making the samsulg galaxy S8 plus, but somehow that phone costs $800 at retail. Meanwhile, most of the parts in that Oneplus 5T are even made by samsung.

So you really believe that it costs samsung $300 more to make their own phone that is basically using the same parts? Or that samsung somehow makes more reliable phones than ONEplus  that justifies their mark up.

NO. Thats not why these things cost what they do.

RolStoppable said: 

The same way I believe that first party controllers for any console cost more to produce than third party controllers. The latter are sold at a significantly lower price because they use much less reliable components on top of being lower quality to begin with. That's your mistake here: You believe that all components are created equal, because otherwise you wouldn't bring up $50 tablets in the first place.

I do not believe all components are sold equal. 

I just use that $50 tablet example to give you a baseline. Even if the components in the switch somehow cost twice as much as every single component in that $50 tablet.... its noyt still gonna come to a manufacturing cost of upto much less more than $250.

 

Look, I am just gonna let you guys keep believing what you believe. I see there is no point to this. Its like arguing that the sun is gonna come up tomorrow or not.



nemo37 on 04 January 2018
Intrinsic said:
nemo37 said:

Just because the tablet you described costing so little (though I have never seen a tablet with 4GB of RAM costing $50; in fact, the only ones with 2GB that I saw were refurbished models at a liquidation centre) does not indicate much for the cost of the Switch. Not all components are built equally or priced equally. For example, a 720P AMOLED (used in some early-2010s Samsung products) costs way more than an IPS 720P display (used in Switch) which in turn costs way more than a 720P TN panel (and there are even variations by manufacturers between each type). Another example is the SOC, the SOCs in those cheaper are typically provided by Chinese companies like MediaTek; these SOCs are nowhere near as powerful as a Tegra, not to mention MediaTek operates on far lower margins than Nvidia (ie Nvidia is likely to charge more for its products). The 3DS, which contained far more older components (many of the 3DS's components including its SOC came from the mid-2000s whereas many of the things in the Switch come from 2015, like its SOC and WiFi chip) and yet it was selling at a loss when Nintendo slashed the price to $170 (btw companies do not factor in R&D cost, marketing cost, shipping cost when saying if a device is selling at a loss or profit; it is typically done by adding price - cost of materials - cost of manufacturing - Licensing costs/royalty costs); there is no way Switch in 2017 cost less than 3DS in 2011 to make. With that being said though, the cost of electronics depreciates as you sell in high volumes, so the cost of the Switch might have dropped at this point (again nowhere near $50 and most likely not even in the $100s). The 3DS, for example, was no longer selling at a loss by the summer of 2012 (most likely due to the being able to sell in high volumes previously).

Ok, Let me just make this simple for you..... Take the ONePlus 5T. Snapdragon 835 SOC, 6GB of Ram, 4g LTE and Wifi Radios, BT 5.0, USB type C, 64GB of storage, 1080p AMOLED Screen costs around $299 to make. Is sold for $500. The same components (better with regards to the screen rez, same SOC, worse with regards to amount of Ram) used in making the samsulg galaxy S8 plus, but somehow that phone costs $800 at retail. Meanwhile, most of the parts in that Oneplus 5T are even made by samsung.

So you really believe that it costs samsung $300 more to make their own phone that is basically using the same parts? Or that samsung somehow makes more reliable phones than ONEplus  that justifies their mark up.

NO. Thats not why these things cost what they do.

I understand what the concept of a profit margin for a product is. However, are you seriously suggesting that Nintendo is taking a $50 system (or even say $100 system) and marking it up to $300 and then telling their investors that they are only making a very slim profit on each unit (not to mention their earnings reports do not in any way have profits that would match up with selling a high volume product at a $200-250 profit margin; even a $50 profit margin for Switch would have resulted in much bigger earnings than what they presented) ? Also, one thing that I do not understand, is that you are using a component breakdown analysis for the cost of production of the OnePlus 5T yet when Rol gave you a similar analysis for the cost of the Switch you refused to believe it.



DonFerrari on 04 January 2018
OfficerRaichu15 said:
DonFerrari said:

A console selling better because it's better is one of the worst reasonings you ever saw?

Y’all really think Europe prefers Xbox One over the Switch? The software charts for countries such as Germany and France include a larger amount of Switch Titles than Xbox one Titles. The more software usually means more consoles that are sold. Also he needs to explain why it is better? 

So people prefer Switch but buy Xbox cause of reasons?

A good reason to buy something over another is it being better. Also, is the sum of Switch sold SW higher than X1 or just that the top 10-20 have more Switch games than X1? Because you shouldn't confuse total with a part.

So the other guy need to explain why it's better for the point of being better bringing more sales?

Also you are mixing 2 points. The remark I was responding to was why it's the worse point ever made to suggest a console being better would make it sell more. Do people buy the worse product? Are they masochists?



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

Azzanation: "PS5 wouldn't sold out at launch without scalpers."

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Vizigoth04 on 04 January 2018

I Am Groot



NintendoPie on 04 January 2018
DonFerrari said:

A console selling better because it's better is one of the worst reasonings you ever saw?

The fundamentals of the reasoning are flawed. The Switch has had a better first year as a games console than multiple years of the XBO, and anyone with a sense of clarity can tell that, going forward, the Switch will continue to have better games output than the XBO. This has been basically proven and discussed multiple times, it shouldn't really be an odd thing to point out.

I saw your other post and I can only hope that you questioned my post purely because you thought it odd that people buy a worse console just on precedence, I forgive you for that assumption.

Last edited by NintendoPie - on 04 January 2018

DonFerrari on 04 January 2018
NintendoPie said:
DonFerrari said:

A console selling better because it's better is one of the worst reasonings you ever saw?

The fundamentals of the reasoning are flawed. The Switch has had a better first year as a games console than multiple years of the XBO, and anyone with a sense of clarity can tell that, going forward, the Switch will continue to have better games output than the XBO. This has been basically proven and discussed multiple times, it shouldn't really be an odd thing to point out.

I saw your other post and I can only hope that you questioned my post purely because you thought it odd that people buy a worse console just on precedence, I forgive you for that assumption.

Nope.

You may say that Nintendo 1st party is better than MS (even if some will disagree), but considering everything that have already been released to X1 then it's a lot bigger and superior to Switch. And for some people it being the best option and buying doesn't seem like a ridiculous proposition.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

Azzanation: "PS5 wouldn't sold out at launch without scalpers."

Intrinsic on 04 January 2018
RolStoppable said:
Intrinsic said: 

I do not believe all components are sold equal. 

I just use that $50 tablet example to give you a baseline. Even if the components in the switch somehow cost twice as much as every single component in that $50 tablet.... its noyt still gonna come to a manufacturing cost of upto much less more than $250.

 

Look, I am just gonna let you guys keep believing what you believe. I see there is no point to this. Its like arguing that the sun is gonna come up tomorrow or not.

So now you doubt the teardown costs you posted yourself earlier?

No I do not doubt them...  I was just attempting to keep an open mind in this discussion. Look Rol... we both know how these go. Please lets just leave it alone.



TH_Lis on 04 January 2018
Wiibaron said:
How much $$$$ did Sony lose with those million sales? How much profit did Nintendo make? Microsoft?

Sony and Microsoft can lose money to one another because they share the same market, the hardware prowess or more commonly known as the red ocean.

 

Nintendo took another direction and is navigating in the calm waters of the blue ocean and are gaining the profits of staying there.

 

That's why the switch is a success.

 

But I have to say that if Microsoft and Sony decides to put a boat in the same waters, like they did in the past, perhaps Nintendo gonna need to watch out.

 

Like a power dock to cut the only loose end that the company have now that is the hardware power. If they do it before Sony or Microsoft consider this kind of idea, they will still remain in calm waters without bothering.