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Forums - Nintendo - Who thinks the wii only costs a 100$ to make?

TheSource on 03 August 2009

There is no way in hell a Wii costs less than $100 to make.

Wii has a number of things that make it cost more than GC:

- Slightly better tech

- Its smaller by area

- It comes with an infared light projector/camera

- It can read motion tech control

- The $250 package includes a game, Wiimote, nunchuck, Wii Sports, sensor bar, Wii-stand

- GC used cheaper/smaller mini-discs and I dont think it had any flash memory.

 

The Wii package is probably sold to wholesalers for $225. So I'd bet the package of Wii ($150) + Wii Sports ($20) + Wii Mote w/ batteries ($30) + Nunchuck ($12) + Wii stand ($5) + Sensor Bar ($3) was just beyond the point of break even.

Today, its probably more like this Wii ($135) + Wii Sports ($10) +  Wii Mote w/batteries ($20) + Nunchuck ($10) + Wii stand ($3) + Sensor bar ($2). But that isn't $70 in profit, because retailers still buy it for $225 or whatever. It might be $45 in profit though - which is why we may see a Wii price this year despite what Iwata has said so far.

The GC was profitable as a platform, and since it had abysmal software sales (never more than 50 million shipped in a fiscal year) due to its low hardware sales (despite a huge attach rate of 9.6 lifetime) its pretty likely the hardware itself was profitable as the royalties on Game Cube third party games would have next to nothing ($10/third party game...20m third party games sold per year on avg...~200m a year at best).

Wii in contrast has seen something like 190m third party games shipped in ~2 years 8 months which comes to 70m+ per fiscal year at $10/third party game. Thats $700 million a year...which means Nintendo could probably still be profitable on Wii even with a $100 price drop even if the Wii package costs $180 to make still.



People are difficult to govern because they have too much knowledge.

When there are more laws, there are more criminals.

- Lao Tzu

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machinegunmike on 04 August 2009
TheSource said:

There is no way in hell a Wii costs less than $100 to make.

Wii has a number of things that make it cost more than GC:

- Slightly better tech

- Its smaller by area

- It comes with an infared light projector/camera

- It can read motion tech control

- The $250 package includes a game, Wiimote, nunchuck, Wii Sports, sensor bar, Wii-stand

- GC used cheaper/smaller mini-discs and I dont think it had any flash memory.

 

The Wii package is probably sold to wholesalers for $225. So I'd bet the package of Wii ($150) + Wii Sports ($20) + Wii Mote w/ batteries ($30) + Nunchuck ($12) + Wii stand ($5) + Sensor Bar ($3) was just beyond the point of break even.

Today, its probably more like this Wii ($135) + Wii Sports ($10) +  Wii Mote w/batteries ($20) + Nunchuck ($10) + Wii stand ($3) + Sensor bar ($2). But that isn't $70 in profit, because retailers still buy it for $225 or whatever. It might be $45 in profit though - which is why we may see a Wii price this year despite what Iwata has said so far.

The GC was profitable as a platform, and since it had abysmal software sales (never more than 50 million shipped in a fiscal year) due to its low hardware sales (despite a huge attach rate of 9.6 lifetime) its pretty likely the hardware itself was profitable as the royalties on Game Cube third party games would have next to nothing ($10/third party game...20m third party games sold per year on avg...~200m a year at best).

Wii in contrast has seen something like 190m third party games shipped in ~2 years 8 months which comes to 70m+ per fiscal year at $10/third party game. Thats $700 million a year...which means Nintendo could probably still be profitable on Wii even with a $100 price drop even if the Wii package costs $180 to make still.

You know you make me sick with lies, you have the nerve to say that wii sports costs 20$ thats where you lost your argument, Also everything you posted is bullshit,wii mote is like 10$not 30$wii sports is 1$ not 20$ the nunchuck is 5$ not 12$ the wii package is sold to wholesalers for 240$ not 225$.   Stop camparing the gamecube to the wii.



roxaskey on 04 August 2009

I'm not sure but I believe I read somewhere a while ago that the Wii costs only half its price to make.

Edit : found a source http://www.tomsguide.com/us/nintendo-wii-price-drop-costs,news-3758.html



Untamoi on 04 August 2009
Squilliam said:
TWRoO said:
Squilliam said:
vonboysp said:
Squilliam said:
Im confused here:

Some people claim that the GC never lost money @ $100

Other people claim the Wii cost more than $100

The Wii = shrunk GC hardware.

if you'll go back to twroo's posts, you'll find the people claiming the wii only costs 100$ don't know what the hell they are taliing about.

Does that mean the people who claim the GC was profitable at $100 are the same?

GC wasn't profitable at launch (I believe Viper said it was losing like $9 per unit)

GC however, was at the time more advanced tech than the Wii is now, so it's costs will have come down quicker... I have no idea whether GC hardware was profitable when it dropped to $100, I would suspect it was actually but the Wii is only based on the GC architecture, it is NOT just a GC inside that they modded to go a bit faster. One of Nintendo's aims making the Wii was to have the GPU and CPU as small and cool running (remembers 4 Jamaicans in a bobsled) as possible, so the chipsets will cost more to make and as they are less advanced in power terms, don't come down in price as fast. The Wii also has a lot of other things the GC did not have, like wireless and a mechanical slot loading drive, SD card slot... big hunks of plastic for the stands and things like the sensor bar... lots of things that are additional, but don't decrease much in cost.

To be honest I think they have probably cut costs on Wii hardware quite a bit... ie IF it was ~$195 to produce 1 unit at launch... it would probably be about $150 by now.... but the exchange rate has cocked everything up so much I think they get less per unit now than they did at launch in revenue (from overseas, which is most of the sales after all)

The Wii remote costs have probably come down a lot more (percentage wise) than the console has, because at launch the sensors in the remote were not produced in such huge numbers (I believe they are of similar tech to ones used in cars or something... do cars need them for the speedometers? I dunno, I guess not as all cars have speedos but I remember something about cars, so perhaps some off-road vehicles need them)
That is also an additional cost from the GameCube too, a Wii remote and nunchuck will cost a lot more to make than the GC controller.

Small and cool running = cheap, especially as they now use the ultra cheap 90nm process node which is used for commodity chips now. The I.P used for the Wii is practically worthless and they would hardly be paying any royalties to use the technology in the console itself. If you look at the equivelent in the chip business, its probably the G80 90nm -> G92 65nm -> 55nm -> 40nm and getting cheaper and faster at every step. Just because it doesn't come down in price, doesn't mean that the price isn't low to start with though the price of the Wii hardware over volume is still likely cheaper than the cost of the Gamecube even though the internals are faster, aside from the controllers. The economics for the 1st million produced looks different from the economics of the 50th million produced.

SD card slots are in everything, and cheap. The sensor bar is only a few leds and a wire behind some darkened plastic and the controllers cost far less now than they did 3 years ago. I can't say what the Wii actually costs to produce but in Yen equivelents it has to be cheaper than the Gamecube ever was because for the most part its a simplified Gamecube.

Wireless controllers are MORE expensive than wired controllers were 3 years ago and wiimote also has motion control. You should know than on PC wired version costs usually 15-20€ less than wireless version of the same model. And Wii also has flash memory which also adds to cost.



Rhonin the wizard on 04 August 2009

Anyone remember that Forbes article that stated: "every Wii brings in $6 of operating profit for Nintendo"?

I don't know how much it costs Nintendo to make a Wii, only Nintendo knows that.



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Destroyer_of_knights on 04 August 2009

if true, then the wii is one seriously overpriced machine...this is how Iwata and Miyomoto swim and make snow angles in money.



superchunk on 04 August 2009

Nope.

It's like new cars vs 3 year old cars.

If you buy a new car you will lose what, 30%+ of its value in three years, easy.
If you buy a 3yr old car you will lost probably only 15% max of its value in the next three years.

The older the tech, the slower its decrease cost curve. Wii is easily reducing costs at probably 1/4the the rate PS360. That combined with the huge difference in Yen to Dollar/Euro/Pound etc value shift makes Wii even less profitable.

Plus, its not just the cost of the actual raw material. There's wages for Nintendo people, advertising, development costs on games, (why Wii Sports does not cost $1 to make, years of R&D went into that game combined with motion controls etc).

Wii was estimated to cost to produce about $200, then add in other costs and your looking at more like $220 easy. Then as TheSource said, N sells to retailers for probably about $235 or so.

Now, its probably more like $140 to make plus the loss of revenue due to dollar deflation you're moving back up to $160 while other items remain constant. So, about $190 in total costs and a selling price of $235 to retailers. So, yeah they are making $20-30 more per unit MAX, but that won't justify a price reduction when they are still outselling the competition 70-80%.

New color and games will either cause a major boost this holiday through March or Wii price cut in April 2010.



machinegunmike on 04 August 2009
Destroyer_of_knights said:
if true, then the wii is one seriously overpriced machine...this is how Iwata and Miyomoto swim and make snow angles in money.

lol



TWRoO on 04 August 2009
Squilliam said:
TWRoO said:
Squilliam said:
vonboysp said:
Squilliam said:
Im confused here:

Some people claim that the GC never lost money @ $100

Other people claim the Wii cost more than $100

The Wii = shrunk GC hardware.

if you'll go back to twroo's posts, you'll find the people claiming the wii only costs 100$ don't know what the hell they are taliing about.

Does that mean the people who claim the GC was profitable at $100 are the same?

GC wasn't profitable at launch (I believe Viper said it was losing like $9 per unit)

GC however, was at the time more advanced tech than the Wii is now, so it's costs will have come down quicker... I have no idea whether GC hardware was profitable when it dropped to $100, I would suspect it was actually but the Wii is only based on the GC architecture, it is NOT just a GC inside that they modded to go a bit faster. One of Nintendo's aims making the Wii was to have the GPU and CPU as small and cool running (remembers 4 Jamaicans in a bobsled) as possible, so the chipsets will cost more to make and as they are less advanced in power terms, don't come down in price as fast. The Wii also has a lot of other things the GC did not have, like wireless and a mechanical slot loading drive, SD card slot... big hunks of plastic for the stands and things like the sensor bar... lots of things that are additional, but don't decrease much in cost.

To be honest I think they have probably cut costs on Wii hardware quite a bit... ie IF it was ~$195 to produce 1 unit at launch... it would probably be about $150 by now.... but the exchange rate has cocked everything up so much I think they get less per unit now than they did at launch in revenue (from overseas, which is most of the sales after all)

The Wii remote costs have probably come down a lot more (percentage wise) than the console has, because at launch the sensors in the remote were not produced in such huge numbers (I believe they are of similar tech to ones used in cars or something... do cars need them for the speedometers? I dunno, I guess not as all cars have speedos but I remember something about cars, so perhaps some off-road vehicles need them)
That is also an additional cost from the GameCube too, a Wii remote and nunchuck will cost a lot more to make than the GC controller.

Small and cool running = cheap, especially as they now use the ultra cheap 90nm process node which is used for commodity chips now. The I.P used for the Wii is practically worthless and they would hardly be paying any royalties to use the technology in the console itself. If you look at the equivelent in the chip business, its probably the G80 90nm -> G92 65nm -> 55nm -> 40nm and getting cheaper and faster at every step. Just because it doesn't come down in price, doesn't mean that the price isn't low to start with though the price of the Wii hardware over volume is still likely cheaper than the cost of the Gamecube even though the internals are faster, aside from the controllers. The economics for the 1st million produced looks different from the economics of the 50th million produced.

SD card slots are in everything, and cheap. The sensor bar is only a few leds and a wire behind some darkened plastic and the controllers cost far less now than they did 3 years ago. I can't say what the Wii actually costs to produce but in Yen equivelents it has to be cheaper than the Gamecube ever was because for the most part its a simplified Gamecube.

Well I don't know much about chips but I thought there was a difference between dropping the nm to make it smaller and cooler, and actually designing the chip in a way that keeps it small and cool in the first place.

I don't know what you are talking about for an I.P... I was talking about hardware, the Wii has to have something inside it to link with the nearest router, and possibly a second something to link up with DS/other Wii wirelessly (I would have thought you could use 1 wireless thing for both, but I remember when someone opened up a Wii they did point out 2 different wireless aerials... perhaps one as for bluetooth or something)
If SD cards and ports like that cost so little, why does Sony bother taking them out for it's PS3 cost cutting measures... hell the thing was meant to launch looking like a swiss cheese with all the ports, the current PS3s barely have more holes than a Wii.

------

All I can tell you for sure is that the Wii does not (on average) make more than ~$50-60 at best (and more like $30-40) but I do think without the exchange rate problems it would probably be making close to $100 on average.
AND the GC was losing $9 at launch (so it presumably cost ~$209 to make) while the supposed Wii profitablity at launch was about $50... so it cost about the same to make a Wii at launch as it did to make a GC at it's launch (well slightly less)

I can't tell you whether the GC was profitable through it's life, it is possible the GBA was holding the company up a lot more than we thought... but I highly doubt your statement of "has to be cheaper than the Gamecube ever was" because I am pretty certain they managed to make the GC at least $9 cheaper that it was at launch.
I may not be that knowledgable on the costs of parts, but I can see you are missing something by just looking at Nintendo's reports and not seeing the entire wealth of the world being pulled by gravity towards Nintendo's wallet.

The exchange rate is cocking things up, so yes Nintendo would be making masses of profit were it better... but it would still be costing them now, more than the GC did at the end of it's life.... I think you could be right about the GC not always profiting when it went to $100... but do you really think they were losing in excess of $50 per unit at the end of it's life (never mind when they first droped the price)
You have to remember by the way when I am on about producing the console I am talking about the entire cost of Wii hardware split into how many units there are.... so that includes packaging (Wii packaging is more complex than GC was) advertising (not specific game advertising, but any that has only been about the console, I think most of those were very early in the Wii's life like those about the weather/news/photo channel) shipping (will have cost more per unit than GC because of risen oil prices etc... that and Nintendo had to resort to flying in consoles over Christmas to meet demand, which will have been expensive compared to using cargo ships) the additional cost of including a game etc (so any development costs for Wii Sports are included, [and disc printing but that is very minimal])

Everything adds up.... all the GC shipped with was the power cable, RV cable and 1 controller.... The Wii hardware is more advanced than GC (but had that been the only change... yes the Wii would be much cheaper than the GC was at launch.... but pretty obviously not "cheaper than the Gamecube ever was" because the GC being shipped in 2006 was both less advanced (be it not that much it is still something) as well as already been in mass production. It has all those things I and The Source mentioned, which while they may only b a few $ by themselves all add up, as well as more advertising/shipping costs.

So even without the bad exchange rate the Wii would still cost more NOW than the GC did when it died.



TWRoO on 04 August 2009
machinegunmike said:
TheSource said:

There is no way in hell a Wii costs less than $100 to make.

Wii has a number of things that make it cost more than GC:

- Slightly better tech

- Its smaller by area

- It comes with an infared light projector/camera

- It can read motion tech control

- The $250 package includes a game, Wiimote, nunchuck, Wii Sports, sensor bar, Wii-stand

- GC used cheaper/smaller mini-discs and I dont think it had any flash memory.

 

The Wii package is probably sold to wholesalers for $225. So I'd bet the package of Wii ($150) + Wii Sports ($20) + Wii Mote w/ batteries ($30) + Nunchuck ($12) + Wii stand ($5) + Sensor Bar ($3) was just beyond the point of break even.

Today, its probably more like this Wii ($135) + Wii Sports ($10) +  Wii Mote w/batteries ($20) + Nunchuck ($10) + Wii stand ($3) + Sensor bar ($2). But that isn't $70 in profit, because retailers still buy it for $225 or whatever. It might be $45 in profit though - which is why we may see a Wii price this year despite what Iwata has said so far.

The GC was profitable as a platform, and since it had abysmal software sales (never more than 50 million shipped in a fiscal year) due to its low hardware sales (despite a huge attach rate of 9.6 lifetime) its pretty likely the hardware itself was profitable as the royalties on Game Cube third party games would have next to nothing ($10/third party game...20m third party games sold per year on avg...~200m a year at best).

Wii in contrast has seen something like 190m third party games shipped in ~2 years 8 months which comes to 70m+ per fiscal year at $10/third party game. Thats $700 million a year...which means Nintendo could probably still be profitable on Wii even with a $100 price drop even if the Wii package costs $180 to make still.

You know you make me sick with lies, you have the nerve to say that wii sports costs 20$ thats where you lost your argument, Also everything you posted is bullshit,wii mote is like 10$not 30$wii sports is 1$ not 20$ the nunchuck is 5$ not 12$ the wii package is sold to wholesalers for 240$ not 225$.   Stop camparing the gamecube to the wii.

I'd love to know where you get your information.

Especially as I have seen in another thread you post that the PS2 has sold more than 140 million, when it hasn't even shipped that number yet.

Yeah sure the Wii costs less than $100 to make Mr bullshit.