“If it is predetermined that the hardware price shall gradually decrease, then that model reiterates the notion that early purchasers will suffer a loss, which I do not believe is the right business model. I believe that something must be wrong if we conduct our business with the premise that we will need to cut prices of our hardware as time goes on.”

http://www.nintendo.co.jp/ir/en/library/events/080425qa/index.html

Nintendo are kind for not lowering the price of the Wii, because if they would have.. well.. then the early adopters would have felt stupid for buying something that suddenly starts selling at a lower price. Commendable. Am I being sarcastic here? No, I mean, it is a valid point. But I don’t get the part where he mentions that there must be something wrong with a business if it presupposes that you have to cut prices of the product at one point… I mean, it’s technology, if the product becomes cheaper to manufacture, if the product isn’t “cutting edge” anymore, then you lower the price, at least if it started out at a relatively high price point for what it is… ok, so that statement is of course not quite right, the Wii was never cutting edge from the get-go, and that was never the plan either, and the price point isn’t ludicrous, just think about how much money you have to dish out to buy a new personal computer and how weak that hardware is compared to Xbox and Playstation. Nintendo obviously just wants to make a profit of what it’s selling, I mean, compare that to Microsoft who is playing catch up with the software, hoping that the revenues from the software–or games–sales will even out the loss they make for every Xbox being sold. And that’s of course what’s so funny: Microsoft is selling something that’s somewhere in between 10 to 15 times faster than what Nintendo is selling for the same price, but Nintendo is still outselling them.

“Likewise, the costs for Wii are expected to decrease. However, when we compare Wii with other machines, whose core semi-conductor chip comprises a comparatively big share of the costs, there is a difference in how a price decrease of these semiconductor chips contributes to the total price cut, as the chip price is not a dominant factor in deciding Wii hardware’s price.”

http://www.nintendo.co.jp/ir/en/library/events/080425qa/05.html

So what Iwata is saying here is that there really isn’t any major cost associated with the Wii hardware? Because what else is expensive in a videogame console other than the semi-conductor chip? The sensor bar and Wii-mote aren’t expensive at least. I just think this quote is a bit funny. It’s like Iwata is saying “hey!, since there isn’t any expensive semi-conductor chip in our product it wont undergo the same decrease in price as the competition will see. I’m not saying it’s just a shell, but you get the idea”. I mean, sure he is not saying that, and he is clever and trying to allude to there being other things you take into consideration as well when putting the price on a videogame console, and sure, that would be the controls, and yes, they are more expensive than the competitions controls, so in that sense, a valid point, but above all it’s really the simple plain fact: they know what people want and what sells, they are alone with this, and they are in a position to sell millions, which they do. They are in their own market and thus can set their own price point. It’s like saying “hey! we got this really cheap aeroplane here for you, I mean, it’s just as cheap as that boat over there” “yeah, so? I want to be at sea, with a fishing-rod, and the only thing that can offer me that experience right now is the boat, so I buy that” “but the aeroplane will take you to your destination in no time…” “it might, and that’s all great, but it’s a different experience, and right now I prefer the boat experience, besides, the aeroplane has been around for ages, I want to try something new (and that’s where this analogy sucks big time, but that’s just the way it is)”.

Will the Wii be slightly cheaper to buy next year? Probably, although chances are just as high that the Wii will be in the same high demand come next year. I mean, Iwata is right when he mentions that it’s the actual software that sells the system, and that with only the right software you can prolong a consoles lifetime with several months or years (although years probably wont hold true in today’s competitive videogame market).

Nintendo will of course push at two fronts this E3: casual and hardcore. The thing is… with all the money they have been making on both the Wii and the DS; they will probably show a lot of titles. If they usually only show 2 major franchise titles every E3, they will probably show at least 3 this year, 2 or 3 very robust new ip’s, and maybe 2 very robust casual titles, and this is not counting all the third party support. I wonder what those guys who previously worked on the “Project Hammer” title have been up to, not because I had any interest whatsoever in that title, which they apparently just stopped working on, but because they obviously are talented, and if they are working on something new, it would be interesting to see what that is.

Anyways, the reason I mention E3 is because it’s not like Nintendo is a company that just makes a lot of money and then sits back and relaxes comfortably, they invests their money in what they need to survive.

Posted in Mind Roll by Carl | Comment
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