I also just looked up the parts.
None of them are used in any commercial applications, and the ones that are, are already super saturated, like wireless 802.11, and bluetooth. Parts like these will see barely any cost reductions. There will be reduction in manufacturing costs, putting the thing together, but not much else.

As I showed in the OP, manufacturing costs ~19$ at launch.

@OP: Interesting analysis, but don't forget a pair of things:
1) surely Nintendo holds some control on components IP, hired more than one supplier for important components when it ramped up production and can ditch IC manufacturers too greedy
2) being based on mature components it's quite normal cost reduction tends to be slower.

While I am not sure of the figures, I still think that Nintendo will not lower its price until after the holiday season because it cannot generate sufficient sales to make up in volume the profits it loses by dropping its price tag.

Mike from Morgantown

Because it's outselling the PS2 during the same time frame... when the PS2 already had a price drop.

Why would you lower your price when your selling more consoles then anyone ever has? How many more could you actually sell?

Even if there price was getting drastically cheaper it would be stupid to lower the price.

Well, the Wii has a really good return on SW sales. It's first party is through the roof, and the attach rate is also close to even with the ps3.

Even if the Wii was making Nintendo 50$ net profit on each sale, it would be smarter to cut the price 50$ and sell the software, which probably makes about 50$ after three first party game sales, not to mention accessories.

I don't think Ninty needs the Wii drop, it's true that sales are not like in the beginning, but they are still the champs in every region, and their upcoming games are going to draw more sales, even if the PS3 Slim beats them (i don't think so but who knows) this holiday season they will be profiting a lot more between their consoles and their major 1st party lineup (that always passes the 5m barrier and sometimes the 10m barrier)...

If their profit margin is $6 per console, and let's say their sales are down to 8 million (last holiday season they were more than 9), it's still 8 million that profit on hardware + software, if they drop the price and the sales go up, they will depend entirely on software, that will translate in less profit... And even if the margin is bigger than $6 and the drop still makes a profit, the sales will not compensate for the drop and the profit will still be less...

@Anarchyz

unfortunately, I am far too lazy and uninformed to figure how much they would be able to make on a 250 vs a 200$ wii as far as demand and SW is concerned.

Generally speaking, a price drop is supposed to stop the drop of sales, and level it off at the previous quota. So if Nintendo keeps up it's trend of wii sales as they did last year between X and March (X being the date of a suspected price drop), then a price drop would have been useless. If it sells less, we can look at the difference, factor in all the variables and find what a price drop would have made them.

Yeah, i know, it's not very useful because we are trying to predict sales, but that's all we can do for now.

The best thing we can do is say, "a price drop on the wii would either negatively, or positively affect profits". Although it would be better if we knew what the demand was.

The yen situation has been improving as of late. According to NJ5's graphs, it's more like 20-25% for the dollar and 15-20% for the Euro.

@theProff00

Hypothetically

If Nintendo is making $75 on a $250 Wii, it would make $25 on a $200 Wii.
75/25= 3. Which means it would need to sell 3x Wiis for the same profit.

If Nintendo is making $100 on a $250 Wii, it would make $50 on a $200 Wii.
100/50 = 2. Which means it would need to sell 2x Wiis for the same profit.

If Nintendo is making $60 on a $250 Wii, it would make $10 on a $200 Wii.
60/10 = 6. Which means it would need to sell 6x Wiis for the same profit.

If Nintendo is making $50 on a $250 Wii, it would make nothing on a $200 Wii.
And Nintendo does not sell to break even.

If Nintendo is making $40 on a $250 Wii, it would lose money on a $200 Wii.
And Nintendo does not sell at a loss.

Mike from Morgantown

http://digg.com/nintendo/Report_Nintendo_Makes_About_49_Per_Wii_Sold_in_U_S

In 2007 they were making about 49$ per wii sold in the US, 79 in the UK, and 19 in Japan.

This is why: when Wii came out it cost 25000 Yen in Japan. 25000 Yen was about 212$ in America.

So, when ever people in America bought a Wii, Nintendo was making an extra profit of 38$, for a total of 19(profit on a native yen sale)+38-shipping costs= ~50$

The change in currency has gone from 119 to 90.4 yen per dollar. So 25000 yen = 276$

It went from 212 to 276. 64$. Where they were making 50$ before, they are now losing 14$ due to currency. 50$-64$.

Now, they are making 6$ per console. Going from a loss of 14$, to a profit of 6$, means that between this article and the 6$ article, they made 20$ on parts and manufacturing savings.