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Nintendo earns $6 per Wii

Posted on Thursday, December 04 2008 @ 04:16:55 CET by

David Gibson, an analyst at Macquarie Securities, estimates every Wii console brings in $6 of operating profit for Nintendo. This makes Nintendo unique, as Sony is losing money on its PS3 sales and Microsoft might just break even:
Another factor in enticing those casual users is keeping its console cheap. "The key thing about Nintendo is they want their things to be at price points that anyone can respond to," says Hiroshi Kamide, director of research at KBC Securities Japan. Nintendo's strategy is to buy inexpensive components instead of making them in-house, allowing the Wii to sell for $260 while the PS3 costs $300.

But here's the winning point: Unlike its competitors, Nintendo has figured out how to make money from its console sales. Sony loses money on each Playstation sold. Microsoft (nasdaq: MSFT - news - people ) might just break even. But every Wii brings in $6 of operating profit for Nintendo, says David Gibson, an analyst at Macquarie Securities.

Nintendo also sells 60% of Wii games itself, compared with 30% for Microsoft and 15% for Sony. Wii users are expected to buy the most games this year, 220 million, compared with 120 million PS3 games and 125 million for the Xbox 360.



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