It is well known that the wii was built using older technology. It lacks in graphical support and other areas, and instead substitutes the motion control as their generation leap. Although some would say that the wii still lacks in features compared to the competing, or in Sony's case, non-competing hardware, the proven fact is that the Wii has found a great balance between "good enough" and innovation. Sometimes innovation can be too much, like with BluRay, or sometimes it can be too little, like with the Gamecube's laughable "portability" design. But in this case, the materials were cost effective and the technology became mainstream.
In the Wii's case, and inside the case, are several past or mid-mainstream parts. These parts are old enough that they are probably produced for the wii only. And are most likely produced by an outside company, who charge Nintendo based on several factors like quantity and loss of potential business. The wii's demand is the main factor in this tech's economy. If demand is down, cost to make the parts increases. This is the main challenge of the wii. The worst part of it though, is that the cost difference when demand is up or down, is probably negligible due to the tech being past it's prime. In fact, the wii's parts could be being made at a standard cost per piece, with no volume discount.
What this means, for the wii and for Nintendo, is that costs never go down. That statement is a little hyperbolic, seeing as how the casings can qualify for economy of scale, as well as a couple other parts. However, for the most part, all of that tech has already been mass produced for the longest time already. Even if the tech isn't past it's prime, if it's in it's prime, costs can only go up in the future.
This is a partial wii cost estimate in 2006
Graphic chip 29.60
CPU 13.00
DRAM 7.80
Optical disk drive 31.00
Power supply 11.30
Manufacturing cost 19.50
Cost total 158.30
Wholesale price 195.99
^This does not include the controller cost, the bundled game, the sensor bar, cables, distribution, marketing and the like and the wholesale price is most definitely wrong.
According to this other article, from 2009, wii console costs have come down 45%, and according to Nintendo, currency exchange has fallen about 40-60% based on the currency. Meaning Nintendo is losing just about all the profits it would have made. This is meaningless to the point though.
Sony recently spoke on it's manufacturing costs, saying that it has cut costs about 70%. Looking back on the 840$ costs list, 30% of that is about 252$. Which, when figuring in distribution plus the retail cuts and exchange rate, it probably ends up at 410 or so. With the huge rate of production they just undertook with the slim, especially for XMas and black friday coming up, it is probably now down to 370 or so.
However, the really huge difference here is that ps3 lowered costs by an extra 25% over the same course of time, and yet have sold less than half the amount of consoles. At 50M consoles sold, a ps3 could have dropped in cost by 75-80%.
The technology is really the biggest hindrance to the price drop here, but then again, it started out at nearly half the cost of the other consoles, so stop complaining. :P Had it been brand new technology, it probably would also have been about 70% cheaper, easily an extra 50$ price drop.
