Nintendo Wii Costs Roughly $88 to Manufacture – Analysts

Nintendo Manages to Trim Manufacturing Costs by 45% Since Launch

by Anton Shilov
04/07/2009 | 12:43 PM

Nintendo has reportedly managed to trim its already low manufacturing costs of Wii video game console by 45% since the launch in late 2006, which means that presently it costs the company less than $100 to build Wii system that retails for $249 in the U.S.

 

According to Koya Tabata of Credit Suisse, production costs of Nintendo Wii have decreased by 45% since its release about two and half years ago. According to estimates published earlier, it cost Nintendo about $160 to make its Wii game console back in late 2006, which means that present fabrication cost of the most popular game machine in this generation can be as low as $88, a truly unbelievable price for a current-generation system that has years of lifespan left.

Potentially, claims Mr. Tabata, Nintendo could easily drop the price on the Wii or even introduce a low cost version of the console in emerging markets, which could dramatically widen the addressable market for Nintendo Wii game developers. Some analysts estimate that emerging markets, such as Latin America, Eastern Europe and others represent a billion of potential game console buyers, a massive amount for companies like Microsoft Corp., Nintendo or Sony Computer Entertainment Inc.

Nintendo set the recommended retail price of ¥25 000 (about $249) in Japan, $249 in the U.S. and €249 ($330) in Europe, which means that the actual price of the console exceeds the bill-of-materials cost by up to more than three times, implying that the company makes profits on its hardware, something unusual in the game console business.

So far Nintendo has sold more than 50 million of Wii game consoles.

Nintendo Wii features IBM’s custom PowerPC architecture-based microprocessor named Broadway clocked at 729MHz and code-named Hollywood chip with built-in graphics core, DSP and I/O features from ATI that operates at 243MHz, earlier reports suggested. Nintendo Wii uses 91MB of memory in total: 23MB of “main” 1T-SRAM, 64MB of “external” 1T-SRAM and 3MB texture buffer on the GPU. Nintendo’s Wii does not feature a hard disk drive, instead, it boasts with 512MB of flash memory, but the console also has a SDHC card reader, which allows installing up to 32GB of flash memory.