This thread is a very good read..

Whenever Nintendo drop the price, it'll have to be at exactly the right time because I can't see another price drop happening until the launch of the Wii's successor. The expanded audience are only going to be picking up Wii's this christmas so the price won't effect those customers but core gamers will overlook the Wii for sure at its current price and holiday lineup. Now looking ahead to next year with titles such as Monster Hunter, Red Steel 2, Super Mario Galaxy 2, Metroid: Other M and quite possibly Retro's project and maybe that Wii Crush game from NST it'll be the core gamers next year that Nintendo will target and a price drop will help with those consumers choose Wii.

Also next year will bring motion controls from Sony and Microsoft and so a price drop from Nintendo will help them combat that next year as well. It just makes more sense to wait along with the OP's analysis of the fact that Nintendo may not be in the best position to drop the price in the first place.

Will read through in a minute, but just skimming:

Woah, does this mean Wii costs under $100 to make?!

That's hard to belive considering Sony sells PS2 at profit for $100 and Microsoft was profitable with $300 X360 pro and loses money with $200 arcade (which means they have costs somewhere beetween those values).

If what you say is true then Nintendo would be most incompetent company in the world

They weren't able to shrink parts yet because of high demand(you have to slow down production for a bit to change manufacturing). This is why costs haven't dropped.

It also takes a while to determine when manufacturing will change. Some parts, like the unique disk drive, probably dropped cost a little bit due to scale. But after inflation and exchange differences it's probably more than made up for that reduction. So it's basically never dropped cost.

It's just bad(and good) luck, that demand was so high they couldn't do anything to manufacturing. This will probably change soon, I'm not sure if this year or next though.

One thing they gotta get rid of is that unique self-loading disk drive that accepts mini-disks as well as large disks. If they could only use a standard drive, that thing would cost nothing and drop costs significantly.

So the best solution IMO, is a redesign where they shrink the chips, drop the power supply and include a slot drive like the 360's and FAT-PS2's, which already includes a small opening for minidisks at a really small cost. That would not only incite some rebuys but would also drop costs exponentially. The thing could be priced at less than $150 if they only changed the design a little bit.

Gotcha, yeah I agree there. A brand new tech can be pricy right out of the gate, but will have a substantial dropoff over 3 years.

PS2

the difference with the ps2 is that it had several box revisions, sold 150M (was it?), and used dvd when it was still rather new.

ps2 launched at 299, 10 years later it sells at 99$ (right?) and they make about 8$ per console.

Make that 130M.

But do the components really follow that standard graph?

Mike from Morgantown

They said the same thing about the PS3 slim,and look what happened.