Back when Nintendo's Wii launched, we heard a lot of talk about how the Wii hardware was actually profitable. That's something that the other guys couldn't say. From all of the bragging, I always figured that there were making more than $6. I guess that's still a pretty good figure, though. My dad always said that if you managed to pay all of your bills and still have money left over, you're doing pretty well for yourself, regardless of how much you have left. In other words, $6 is better than nothing.

This Forbes article says that Nintendo's strategy is to buy inexpensive components rather than make them in-house. This has them actually making money on console sales, unlike Sony. David Gibson, an analyst at Macquarie Securities, says that Nintendo earns $6 of operating profit with each sale.

Add on top of that that Nintendo also sells 60% of Wii games itself, compared with 30% for Microsoft and 15% for Sony, and that Nintendo has a higher gross margin on game software than the others at 65%, compared with between 50% and 60%, and it becomes clear that Nintendo is making cash. 

Legacy Comments (will be imported soon)

seltzermx

Hmm, was kind of expecting a "Captain Obvious" caption with this.

Tubatic

Whoa.

So we're seeing a slight stunt of console tech for Nintendo consoles, at a per unit profit of just $6? I guess when the other guy is losing money on each console sold that's something . ..

I mean, when you add it up, that's millions of six dollars.

But still. I had in my non scientific mind a profit of like $50 at least.

Business is funny.

Crunshii

25,000,000 x 6 = 150,000,000 w/ only 1 nunchuck...

I think Nintendo makes more money on nunchucks (+broken) than sold consoles.

DinnertimeNinja

Making ANY money off of the console is a revelation in "The Biz."

Also, there's no way they're only making $6 off of each console at this point. I'd say they're probably around $50 per at this point.

Looks like it's time for a price cut to me. Unfortunately, the rest of the consuming public is perfectly fine to pay $250 bucks plus to play a system for a few hours a month and forget about it the rest of the time.

atastysammich

IT PRINTS A WENDY'S CHICKEN SANDWICH VALUE MEAL!

dmgi

$6 after all the production costs are paid for or $6 to pay the workers and whoever is manufacturing it?

Aaron Mxy Yost

@ dmgi: operating profit = earnings before interest payments and taxes. I'm assuming the rest is already factored in.

Wedge

Lies and chicanery. They said themselves they could have sold it for $200 AT LAUNCH and been fine, but didn't want to make the console look cheap and inferior in comparison to the other consoles, which was a stigma that GC suffered from (though this time it's actually deserved). The components for this thing couldn't cost more than $100 by now if it's nominally more complex than a GameCube, which were $100 at retail.

TheStripe

Mxy, right as usual. Don't forget about the nintendollars from deb kits and software licenses.

Holyetheline

I knew it! They really do make the monies!

Mista Smegheneghan

huh. that's a lot of pepsi and games that could be bought with the profits.

TheMuffinMan

@Wedge

Nintendo did sell the console for $200 at launch; in Japan. Wii Sports was not included with the console in Japan, and as such the console was released at the price equivalent of $200 US dollars, which has always been the estimated manufacturing cost of the console. In early 2007 a Japanese magazine/site printed an analysis of the console's components and figured that with all things factored, a wholesale Wii costs roughly $195 to produce

http://i35.tinypic.com/v4aqsn.jpg

Xhumation

$6 bucks times hell knows how many units = WOW!

'nuff said

John B

I find this hard to believe. $6 per console? Or are they using the console as a loss leader while they rape your ass with Wiimote and nunchuck prices? Is this $6 before or after conversion, since obviously their actual costs are probably more accurately measured in yen?

Regardless, considering how many Wiis they sell, that's still a hell of a lot of money.

parrothead

So they are swimming around like this:

Infinitys End

for (approximate) console sales, I suggest everyone bookmark this link: http://www.nexgenwars.com/

Wii has sold over 24M Wii consoles to date.

TrailerParkJesus

they deserve just about none of it

ShadowKirby

As Nintendo lost their edge a devs ? A bit I say. Have they lost their edge as a business ? Oh hell no!

xenon

I simply do not believe it. Also consider the Wii still costs around 320 $ in Europe, and it's not all higher VAT. This said, making money from selling your products is somehow natural; the gaming industrys' guilt is elsewhere.

boatorious

If Nintendo is anything like me they probably spend that six bucks as soon as they get it. That's two bags of Combos and a Dr. Pepper, right there.

ran196

i just do not believe that they are making a $6 dollar profit on each Wii, i always thought they would be making somewhere near $20

mix

@boatorious

LOL

I would think they make more than that...

Spectreman

* I don´t know. Each company have complex internal finances. U$6 can be after all the money dedicated to research had been considered. And maybe in early days of Wii. The U$50 Wii Sport was paid long ago. Since the plus U$50 price is all profite.

Burnt Meatloaf

There's a zillion ways to spin profit, especially when you don't know the conditions of contracts. This analyst can join the ranks of all the others.

No way in hell their profit is a mere $6, even at launch. One analyst pegged the cost of the CPU at $6, and I believe that.

TheToiletDuck

@parrothead

no one is swimming in that picture.