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90 Comments
- Antialias, on 10/12/2007, -2/+68They are more profitable than Sony or Microsoft now. I don't see why that would change. Especially with all the buzz about the Wii, I can only imagine things getting better for Nintendo.
- cds0528, on 10/12/2007, -3/+53I'm actually not too surprised, Nintendo has always done a fabulous job of minimizing costs.
- tysat, on 10/12/2007, -4/+53Nintendo is playing it pretty smart. I would think that they will end up more profitable than Sony or Microsoft in the end.
- DisposableRob, on 10/12/2007, -2/+33"All consoles bring a loss at first, it's just the way the market works, nintendo and sony and microsoft have all lost money "
This is a bit of a myth. Nintendo has never sold a console under cost. And only the Dreamcast, PS2, Xbox and Xbox 360 (and now PS3) have been priced under cost at launch. - saska, on 10/12/2007, -4/+17"This is a bit of a myth. Nintendo has never sold a console under cost."
This is only half of the story, though. While the console might not be sold under the cost of the bill of materials, the costs of research and development are an order of magnitude greater than the bill of materials and manufacturing expenses. - RyGiL, on 10/12/2007, -1/+13I find this news entertaining. Less than 6 months ago, the internet was swirling with comments about how people think Nintendo should go the Sega route and get out of the hardware business and only do software. Nintendo looks to be doing just fine!
- 5thfreedom, on 10/12/2007, -1/+11I don't think it's so much an impulse buy at $250. The DS definitely is at $129 but people will want to consider and comparison shop before dropping $250.
I still think the Wii should be $199. I would buy one for my living room and one for my bedroom at that price. - treed, on 10/12/2007, -4/+13All the new DS games are coming out at $35, as opposed to $50+ for PSP. Yet another reason why I went DS, and yet more proof that Nintendo knows what they're doing.
- allengeer, on 10/12/2007, -1/+9Consoles "lose money" at launch. That just means the company hasn't recouped its investment into the product. But since products sell well past "at launch" they continue to make money. The investment into the product continues to increase in value, until, they have "made money".
- PicklePower, on 10/12/2007, -5/+13It shows that people are actually interested in the system a little bit.
- SkeletaLlama, on 10/12/2007, -2/+10This isn't a per unit loss. They sell units for profit. This is launch related costs, that is promotion, production, advertising, shipping etc. Costs that have to be paid upfront before the system actually gets to store shelves to sell.
For example MS gave its Xbox division a half a billion dollar advertising budget that accounted for a significant amount of the loss they took on the Xbox launch. That's not related to the loss they take on units sold. Sony and MS typically lose a lot of money on each unit sold and make it up in games sold, or so the theory goes. Nintendo tends to break even or make a profit on each unit. Which is why they've remained more profitable than Sony or MS in the console market. - ajwillys, on 10/12/2007, -1/+9Even Virtual Boy?!?
- noneloud, on 10/12/2007, -2/+9I buried oGMo simply for the pure fact that Sony is an entertainment company that is mostly profited outside of the console wars. Nintendo is only a game company first and final. Compairing their profit stream proves nothing at all. (that link showed all of SCEA not just Playstation profit)
- SoullessDragon, on 10/12/2007, -1/+8I don't think 250 is an impulse buy at all... the core 360 is only 50 dollars more after all. And what if MS lowers the price? 250 may be an impule buy for a gamer but not for the broader audience nintendo is reaching to. I think Nintendo needs to and will sell the console for 199.99 or cheaper
- Zaxx, on 10/12/2007, -3/+9@oGMo here is a true response to your modded down entry :)
I hope no one is crazy enough to assume Sony is going away anytime soon. However the financial statements include a section titles "Operating income (loss)". This breaks down the loss per division of the company (or gains).
If you look at the more recent years the Game division of Sony has been profitable, however as recent as 2004 they were not profitable and lost 27 million on their games division:
http://www.sony.net/SonyInfo/IR/financial/fr/2004-7-28/pdf/sony20040728.pdf
Here is a summery of their games division since 2003: (taken from http://www.sony.net/SonyInfo/IR/financial/fr/ )
Sony Game Division History (all units are USD)
2003 Q1: Profit of 15 million
2003 Q2: Profit of 20 million
2003 Q3: Profit of 659 Million
2003 Q4: Profit of 650 Million
2004 Q1: Loss of 27 Million
2004 Q2: Even (No profit no loss)
2004 Q3: Profit of 433 Million
2004 Q4: Profit of 404 Million
2005 Q1: Loss of 54 Million
2005 Q2: Profit of 73 Million
2005 Q3: Profit of 575 Million
2005 Q4: Profit of 75 Million
This means the strategy of selling the console for less then what it is worth early on pays off the Sony in the long run. What would be very interesting is if someone could find the same information for years 2000 through the end of 2002. That would be the period where the PS2 was selling for less then the BOM. - jmdajr, on 10/12/2007, -1/+7just be a fan :)
- fluffyturtle, on 10/12/2007, -2/+8"Why on earth would people mod oGMo down? That's one of the most infomred and researched comments I've ever seen on digg..."
Then you have been on digg for only a day.
Comparing all of Sony (you fanboys forget sony isn't only about the Playstation) to Nintendo is retarded.
THE ENTIRE electronics department which includes camcorders, cd players, car audio, digital cameras, MP3 players, PC’s, TV’s, *DVD*, PDA’s, and of course playstation related stuff along with games *ONLY MADE 2.15B in 2005*.
Put that in your mod pipe and smoke it.
Don't believe me? Look up stock information and the fricken financial results are right there and if you look up "Sony Electronics, Inc." that is the playstation division. - Zaxx, on 10/12/2007, -2/+8@saska
Do I need to be the one to sah "DUH!". There will never come a time that any product is priced high enough to cover the costs of all the RnD. That is why it is difficult to launch a new product. You need to sell x number of items in order to recuperate your RnD losses and only then will you be bringing in new revenue.
Could you imagine if a company asked you to pay for their RnD efforts for one product.. we would all be doing the Engineering and design on our own instead of forking out that kind of cash. Anyways that is the way business works and it is irrelevant to this story. - ahhell, on 10/12/2007, -3/+9It's amazing how quickly the game industry can turn around. About 8 months ago, Nintendo almost looked finished.
Now look at them!! - ArgyleCubist, on 10/12/2007, -2/+8@oGMo
is that for all of sony or just the playstation division? i can't tell from the link. i don't think it's fair to compare a conglomerate like sony to a company that competes solely in one line of business...
edit: if you can get a link to the playstation division alone i'd like to see it. - mrgreen4242, on 10/12/2007, -1/+5Iwata has said *several times* that they would launch at a "price point consumers find to be acceptable" and that they have "always launch at a reasonable price point". Further, we should "look at the history of Nintendo's consoles to see what they feel a reasonable price is". Every Nintendo home system has debuted for $199. I'd bet the farm on a $199 launch.
- alai, on 10/12/2007, -2/+6Fair enough, I guess "impulse-buy" just depends on your perspective. I still think that a $250 price point is more likely than a $200 one after this news though.
- TetsuoSama, on 10/12/2007, -1/+5I'm hoping some of those losses come from spending big on marketing. That's an area where Nintendo have skimped and suffered IMHO. It's more important with the Wii because they are trying to reach out to a market that haven't owned a console before.
- neovoxx, on 10/12/2007, -2/+5The stats mentioned by oGMo are from ALL of Sony Corp. Not just Sony Computer Entertainment. Not a fair comparison by far.
- freddybeanbag, on 10/12/2007, -1/+4Agreed, and if they sell their 'next-gen' games at $50, it's another price point that they'd have up on the other big two. Suddenly, staying the same became cheaper which is something that would benefit Nintendo even further.
- jvardrake, on 10/12/2007, -3/+5I absolutely cannot understand how people can continue to say this when the console isn't out yet, and they therefore have NOT played any of the games yet. How do you know the "gameplay" and "fun" is so great?
- PicklePower, on 10/12/2007, -1/+3I think it might be a possibility that the cost will be somewhere between $200 and $250. Yeah, $200 would be great, but it may not be enough to keep that loss to a minimum. It would be fine if they sell it at $250, and people would still buy it the same, but they may not need to sell it that high. They don't have to stick to $50 increments. I think it would sell better at $239 than at $249...that $10 feels a lot cheaper to the buyer while still keeping Nintendo's losses on the system low at the beginning.
We have to remember what they're shipping with the system too...those controllers aren't your normal $15-$30 controllers. I think it would be reasonable to ship the system with two remotes because a lot of the release games are 2P, and to encourage multiple players, which is the idea behind "Wii"...to bring everyone together. - jtreach, on 10/12/2007, -2/+4I used to see nintendo fans as little (or big) kids who just wanted to play Mario Kart but now i have seen the error of my ways. The new nintendo looks good, is innovative, and cheap. I'm also about to get a nintendo DS lite of a referal based site :) Looks like i'm about to become a regular nintendo fan boy!
- Familyguykiller, on 10/12/2007, -1/+3Ha I love it most of these people thinking nintendo where dead. Now they have a kick ass e3 show and everyone is like nintendo rocks blah blah. Well they do rock and if they do this right they will be the most seccesfull system of this generatin. Now with every system nintendo always makes money on sep maybe the Virtual Boy that was a mistake.
- shakin, on 10/12/2007, -2/+4@jvardrake
I think Seidoger point is that the value of a game console is determined by how much fun you have playing it, not by how expensive the hardware costs to manufacture. Dharm seems to think of value as the sum of the parts that make up the system.
To him I say, have fun with your PS3!
As to the value of the games... we'll have to wait and see. - b-dizzle, on 10/12/2007, -1/+3@ oGMo - "Ah, I love how we define "success" as "makes more money" when it suits us, as opposed to "makes a popular console that has a huge library of games." Only the latter really matters to us."
-According to Sony we define "success" as "units shipped". Otherwise Nintendo would've "won" last gen. - LR2_, on 10/12/2007, -4/+6@ FiveFiftyOne
I wish. - dharm, on 10/12/2007, -3/+5wow, fanboys at its best.
i never mentioned anything about once console being better than another, more funner, or more
i wrote that on strictly hardware electronics, you get more for what you are paying for xbox360 or the ps3, than the wii and it's price point.
nor did i mention that the hardware makes the console...
digg is turning into rabid fanboy central, where valid comments get modded down, and comments like "wii rocks" and "i am gonna buy a wii" get digged - Zaxx, on 10/12/2007, -2/+4@saska
Sorry for sounding mean, I was trying to be humorous more then anything but I guess we can't all be Chris Rock. :)
Your statement about selling at a loss referring to RnD costs and BOM costs is inaccurate. When talking about consoles and the loss generated on sales, BOM is what is being referred to. Sony / Microsoft have always sold their consoles at a price that is less then the cost to manufacture and purchase the components (BOM). Their business model is such that they believe this loss will allow them to get the edge over the competition (in terms of console performance) and they can then recuperate the losses via software sales. If they sell 100 million consoles then they will likely sell at least 300 million games and in the sales of the games they make their money. Which is part of the reason that the price for games is on the rise especially on the XBox 360 and the PS3.
Anyways the RnD costs are not in the discussion of selling consoles at a loss since we are only analyzing the BOM for these systems. - Zaxx, on 10/12/2007, -2/+4@oGMo
I would agree that the numbers here do not matter since it clearly shows that Sony has been able to consistently turn a profit in their games division. I am not a Sony fan but I would agree with you when you say that people will jump on Sony for any quarter where they do not turn a profit. That is sensationalist media for you.
However it is important to anyone who is looking to invest in Sony since the game division plays a big part in their profits and the 4th quarter will likely have losses in that division. I agree these losses are in part due to the marketing and other sources however Nintendo will have the same costs and they will not have as much of a loss simply due to the fact that they will not be losing as much (or anything) on the sales of each console. This means Sony will have a lot more than marketing and shipping costs as overhead, they have their sales as overhead which is a unique situation. - PicklePower, on 10/12/2007, -1/+2http://www.spellcheck.net/
- worthawholebean, on 10/12/2007, -2/+3The G3 was made by Motorola, IIRC.
- lnxaddct, on 10/12/2007, -1/+2You are right, Nintendo has always made a profit on hardware, and probably will continue to. I believe this article is referring to overall costs from advtertising and stuff, not just the price of the console.
- solomongrundy0, on 10/12/2007, -2/+3I was one of the people who said Nintendo should've just stopped 6-8 months ago. Atleast until I saw what they were trying to accomplish with the 'revolution'. Then I knew they'd definatly be first or second. Now with their pricing scheme compaired against $ony & M$... They're going to rake in WAAAY more money on the virtual console alone. Not to mention the new games themselves which are most likely going to be at a price point considerably less than the other two...
I really think that this expected 'shortage' is just another play to the market... People want even more so what they can't have. Remember the launch of the PS & PS2? The day after launch... Nonexistant except on eBay for like $100 more than retail. It's all just a scheme to get even more people in the door. (I could also accept them being cautious after the last two generations.) - noneloud, on 10/12/2007, -1/+2Acctually...The PS2 was on eBay for like thousands of dollars. I remember how rediculous all of that was and stayed clear away.
- UNL1M1T3D, on 10/12/2007, -2/+3I don't think Nintendo has ever lost money on any of their consoles, though I could be wrong. I know they were close with the GameCube, but then they just stopped production for a little while.
- vtwin, on 10/12/2007, -1/+1mrgreen4242, and what are your sources? Nintendo/IBM never said Broadway is a G3 variant.
The only official number from Nintendo about the processor is that it's built using the 90 nm process.
Both IBM and Motorola produced G3 variants. But the G4 was a Moto design, and the only G4s IBM produced was to help Moto meet Apple's needs.
There's no such thing as a 90 nm G3, and there never was... IBM first started using 90 nm on PPC with the G5.
I doubt that IBM will try to retrofit the 90 nm process on G3s just for Nintendo.
Why would IBM not use a G5 variant on the Wii? Because the G5 is too hot? Because it doesn't have the same special GameCube instructions that the Gecko PPC chip had?
By some "incredible" coincidence, IBM is working on low-power/low-temp G5s that should be available in the same time-frame as the Wii. And those special GC instructions were later found to be mostly VMX/Altivec instructions which are now an integral part of the G5 (and in the XBOX360 cpu).
Also, with 90 nm it pretty much confirms that Broadway will run at a minimum of 1 GHz, more likely something like 1.5 GHz. And to me it's a given that it'll have more power per MHz than the GC cpu. - Anoobis, on 10/12/2007, -2/+2With the console not making large losses this would mean that the games won't need to support the console sales as much and be cheaper?
- I know they're apparently going to be cheaper but is this the reason or will this make them even cheaper or not make any difference? - BasouKazuma, on 10/12/2007, -1/+1This isnt news. It's common sense.
- u8myfoood, on 10/12/2007, -1/+1this will be nintendo's ALL mighty come back, lol
still i think they need to create more car games for the wii,
something other than need for speed, rather like project Gotham or, gran turismo 4 - slimborama, on 10/12/2007, -2/+2@dharm
I totally agree. People apparently have difficulty grasping the fact that if you are paying $600 and giving the company a heavy loss, versus paying $200 or $250 and giving the company profit, you will then be getting more than what you paid for.
About manufacturing inefficiencies, you're talking about Sony, which made its name on Hardware design and manufacturing, versus Microsoft (software monopoly), and Nintendo (excellent game software). So that could suggest that the spread in value is even greater than it seems at first glance.
Nintendo will probably make better gameplay use of their hardware, but you can definitely expect severely fewer polygons, memory, hard drive storage, and deficient physics and graphics processing power on the Wii. That won't matter for most of Nintendo's games though. - mrgreen4242, on 10/12/2007, -1/+1Whoops on the above... was meant to go with the post right below yours! :)
- kimos, on 10/12/2007, -5/+5Why on earth would people mod oGMo down? That's one of the most infomred and researched comments I've ever seen on digg...
- Ninjaneer, on 10/12/2007, -1/+1@treed
Truer words have never been spoken...especially when most PSP games are falling flat compared to some really standout DS titles. I've got a PSP and 6 games that I've thought very hard about gettin rid of for this sole reason. -
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