Sunday, August 30, 2009
Saturday, August 29, 2009
Analysts like Michael Pachter and others are now more or less singing a chorus that the Wii needs or would benefit from a price drop. While they can analyze that all they want, I just find it interesting how much it may actually be costing Nintendo to manufacture the Wii console.
In December 2006, Engadget.com had an article* that discussed how much the Wii cost to manufacture back then. The article says at one point, “…it seems that Nintendo's brainchild is only costing $158.30 to manufacture, before you consider the Wiimotes…”.
On the chart they were looking at, there was also a “wholesale price” of $195.99 and their article stated, “ which could be a more realistic figure of how much Nintendo is shelling out when taking external costs (like Reggie flying all over the world) into the equation.”
Fast-forward to April 2009, analyst(oh how we love them), Koya Tabata, is basically quoted that, “manufacturing costs are down a full 45%”, according to a second Engadget article*.
Assuming the Wii console bundle was originally costing Nintendo, $195.99, for everything in the box(minus Wii Sports, as I don’t know if that was included in the wholesale price), and now the manufacturing cost has been reduced by 45%, here’s how much it may be costing to manufacture the Wii console with one Wii remote and nun chuck included:
$195.99 x 45% = $88.1955
$195.99 - $88.20 = $107.79
From the original manufacturing price estimate of $195.99, to the new estimate in manufacturing costs reduction being 45%, I would say Nintendo can manufacture and distribute the Wii, for less than $120. If correct, this would mean a Wii retailing at a MSRP of $149.99 or even $129.99 is possible, but not probable, in the very near future.
How much does it cost Nintendo to manufacture a Wii, including everything in the box, in 2009?
Based on the analyst's assumption manufacturing costs are down 45% for the Wii, the amount of $107.79 is what it should be costing Nintendo to manufacture a Wii, including everything in the box, currently in 2009.
How much does it cost Nintendo to manufacture JUST the Wii system itself?
$158.30 x 45% = 71.235
$158.30 - 71.24 = $87.06
$87.06 is the amount it should be costing Nintendo to manufacture just the Wii system itself, if the analyst Koya Tabata is correct that manufacturing costs are down 45%.
That may seem like a low cost to manufacture the Wii, but we must remember, the Wii is simply two GameCubes duct taped together*…
Do you think Nintendo is charging too much for the Wii based on these numbers? Or do you think when looking at numbers like these, that an analyst like Michael Pachter may be right in assuming that Nintendo will announce a Wii Plus HD next year and sell it alongside the current Wii?