Analyst: Nintendo Should Strike 'Weak' Competitors

$199 Wii would thwart recent price cuts from Sony and Microsoft.

by Jim Reilly

August 27, 2009 - With the recent price cuts for the PlayStation 3 and Xbox 360, the games industry is looking to Nintendo's corner and patiently waiting to see if the company will counter with a price cut of its own.

Nintendo already stated earlier this month they have no plans for a price cut. "At present we're not thinking of doing anything with the price," said president Satoru Iwata to investors during a financial Q&A session.

But that was before Sony and Microsoft lowered their premium console bundles to $299. So should Nintendo counter with a drop of its own?

"In order to maintain this position Nintendo should drop their Wii console down to $199, not because the current Xbox 360 or PlayStation 3 pricing structure poses a threat; rather, because they will eventually pose a threat," said analyst Jesse Divnich of Electronic Entertainment Design and Research

"Nintendo's strategy should be to capture as many consumer dollars as possible while their competitors are still weak in their offerings to the casual audience and price sensitive consumers."

Divnich suggested that a cheaper Xbox 360 with Project Natal could attract the same audience Nintendo captured initially with the Wii.

"If sales of the Wii hardware, Wii Fit , Wii Sports Resort and Guitar Hero are any indication of the Wii consumers purchasing habits, then the new user interaction capabilities associated with the Xbox 360 and Natal will be very appealing to the Wii demographic."

He also added that Nintendo "stole" the casual and price-cautious audience from Microsoft and Sony early on, as that consumer base typically wants three or four years before hardware reaches an attractive price point.

IGN article here

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Basically the analist brings up the point: Nintendo should be threatened by its competitors that don't manage to sell even half of the Wii units individually but can turn somehow into threats with their new 300$ price cut.

Ok, this guy needs to stop talking right now. Nintendo have stated plenty of times that this market is big enough for all 3 companies. They are not going to price cut merely to spite Sony or MS

http://www.vgchartz.com/forum/thread.php?id=84291&page=1

Naturally a price cut would increase Wii sales. But they'll dominate Christmas regardless.

I don't see nintendo being cutthroat enough to strike down weak opponents. They've spent some cycles in last place- maybe they really are just a nice company who care about the feelings of others

As usual, people have no idea. Their objective is *not* to hurt the opposition - rather its too maximise their profit.

They always have a potential price-cut in the bag - but for now, they will rather take the "200,000 x $100" in extra revenue a week from hardware sales. Thats a measely $20m/week, or $1bn/yr.

while nintendo is clearly winning this gen, i would hardly call microsoft and sony weak. Microsoft has done great this gen and still looks like its going strong. Ok sony has had it rough and it has suffered the worst blow this gen but they are finally getting their act together with great games cheaper system...(PS3 anyway), and well...uh, i thinks thats it

Eh who cares. I already have a Wii :)

Anyhow, clearly the Wii appeals to a different audience. Even if the Wii was a $99 it won't kill off the "competition."

He must be confused. Subsidizing hardware to (try to) strangle out the competition and create a monopoly is Microsoft and Sony's playbook, not Nintendo's.