It’s not an uncommon practice for console manufacturers to accept early losses on their products in order to sell off as many as possible and gain the greatest install base. Their profits are expected to come later, when the presence of their unit in cuonsumers’ home pays off in terms of software sales.
Nintendo doesn’t do things this way. As a matter of fact, the Big N is turning huge gross profits, as far as videogame consoles go, on every Wii system they sell. According to a Financial Times report:
Nintendo’s gross profit per console is Y1,500 in Japan. In the US and Europe, because the Wii’s retail price is higher and comes bundled with Wii Sports software…the profit margin per console is Y5,600 in US and Y8,500 in Europe, when currency conversions are factored in.
That’s the U.S. equivalent of $13, $49, and $74 in gross profits, respectively. If over 9 million Wii units have been sold worldwide, that adds up to a serious bankroll.
