This story sort of plays out like an episode of Futurama, starting off with Professor Farnsworth’s classic phrase:
“Good news, everyone! According to Credit Suisse analyst Koya Tabata, manufacturing costs for the Wii may have gone down by as much as 45 percent since the console’s launch!”
To which another replies “That’s great! That means that the price of the Wii can finally come down.”
And the Farnsworth tells them “Oh, heavens no. If anything, we’re increasing the price in the UK, thanks to the depreciation of the pound.”
You can kind of see where this is going. Nintendo has not actually confirmed that Tabata’s estimates are correct, nor are they likely to say one way or the other, given they don’t comment on speculation. No one ever does.
Nonetheless, a spokesperson for the company did say that “From the Wii launch in December 2006 to December 2008, the value of the Pound fell by 43 percent against the Yen,” adding that in those same two years, the Euro and the Dollar fell against the pound by 18 and 22 percent, respectively.
Screen Digest’s Games Analyst, Ed Barton, told Edge that it’s actually impossible to estimate by how much the cost of manufacturing the Wii has been cut, because “no one outside of Nintendo knows how much the company pays for all its components.”
He adds that the Wii isn’t made up of cutting edge or scarce components, such as the Blu-ray Sony employs in their PlayStation 3 consoles, but rather more common components Nintendo can order in greater quantities.
“It’s a reasonable assumption that manufacturing costs have dived a bit,” he notes, “yet the effect of a cut in manufacturing costs hasn’t exactly shown up in Nintendo’s recent financial results.”
Barton recalls Nintendo’s January financial posting, in which the company reported a decline in profits of 18 percent, thanks to the stronger Yen, an element which has not been beneficial to Japan’s export trade. From there, Nintendo cut projections of net income from $3.8†‬billion†‬to†‬$2.55†‬billion.
Barton says: “Now, if Nintendo has managed to cut its manufacturing costs so dramatically, like down 45 percent over the two years since launch, then I’d suspect we’d be seeing these negative results partially offset.”
He adds that if the 45 percent number is true, then it should be made obvious in Nintendo’s posting of operating profits during the next financial quarter.
“Also, given that Nintendo has just raised the trade price, I think a company flip-flopping on prices so quickly would not demonstrate the most confidence in what one is doing in the marketplace,” Barton adds. “Maybe it could happen in Japan, if supply has truly equalled demand.”
