Miyamoto wanted a $100 Wii [update 1]
In an interview with Business Week (we've blogged it before), Nintendo legend Shigeru Miyamoto explained that he had wanted the Wii to cost only $100 (likely he means manufacturing cost, though the retail price would shrink accordingly). Miyamoto then admitted that, had they not used NAND flash memory and other pricey parts, they "might have succeeded."We currently don't know how much it costs Nintendo to make a Wii, but knowing that they are making money with every purchase it must cost them less than $250 (probably less than $200, considering the packaged sensor bar, Wiimote, and Wii Sports game). While we don't know how much the flash memory costs (there is 512 MB of internal memory), we found 1GB flash cards on NewEgg for only $22. How close to $100 did Nintendo get? What are these "other pricey parts" that might have been avoided?
[Update 1: The powers of the pro-Sony, anti-Nintendo god must have struck me with a golden apple. Obviously, one in my position cannot make such a mistake otherwise. Misrepresentation of Miyamoto quotation fixed.]
Reader Comments (Page 1 of 1)
Tom @ Nov 17th 2006 7:38PM
I have no doubt Nintendo could sell the Wii for $150 and still turn a profit.
Spartacus @ Nov 17th 2006 7:45PM
I agree with #1. I still hold the position that of all the next gen consoles, the Wii is the most overpriced for what you get. Sure the PS3 has a larger price tag, but in my books, paying $600 for $840 hardware is a better deal than paying $250 for $120 hardware.
The Wii should've been priced at NO MORE than $200USD. While it may end up being a great product, the hardware just isn't worth that much (in monetary terms, everyone will have their own opinion on its overall value).
ZeldaX @ Nov 17th 2006 7:54PM
@ 3
I disagree, Sony is selling both SKU's for $500 and $600 a pop, it took them $250 to make the $500 one and $300 to make the $600 SKU. Also the blu-ray drive costed them a mear $125, and the Graphics Processor just another $125. PS3 is the most overpriced console, imo.
Kata @ Nov 17th 2006 7:55PM
"I agree with #1. I still hold the position that of all the next gen consoles, the Wii is the most overpriced for what you get. Sure the PS3 has a larger price tag, but in my books, paying $600 for $840 hardware is a better deal than paying $250 for $120 hardware"
Oh dear lord, more Vlad logic. In my book, the Wii is still the better deal, as I would still have $350 in the bank account after buying one. (As opposed to $0 if I was able to get my hands on a PS3)
I'm really not understanding all the hate towards Nintendo for wanting to turn a profit from day 1. Isn't the goal of a corporation to maximize the profits for it's shareholders?
ZeldaX @ Nov 17th 2006 7:55PM
oops, i meant @2....
Riemann Lebesgue @ Nov 17th 2006 7:57PM
"Miyamoto then admitted that, had they not used NAND flash memory, they 'might have succeeded.' "
Inaccurate. He said flash memory AND other pricey parts. Surely Joystiq can do better.
Cabcru @ Nov 17th 2006 8:10PM
I love it when net users do these back-of-a-beermat costing guesstimates and miraculously manage to make it prove some imagined point. Makes them look like more a bunch of idiots than usual.
lets just put the gun down and we go get me those fries @ Nov 17th 2006 8:11PM
hahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha
need any more proof that this thing is a gimmick or what?
ps. every wii60 kid call me a retard, go ahead ill be sleeping.
azesino @ Nov 17th 2006 8:12PM
i bet it cost well below $100
gman @ Nov 17th 2006 8:13PM
LEBESQUE READ THE ARTICLE PLEASE FOR THE LOVE OF GOD AND ALL THAT IS HOLY
"Was making a console that would cost $250 or less the goal from the start?
Miyamoto: Originally, I wanted a machine that would cost $100. My idea was to spend nothing on the console technology so all the money could be spent on improving the interface and software. If we hadn't used NAND flash memory [to store data such as games and photos] and other pricey parts, we might have succeeded.
To answer your questions, yes, we set out to design a console that would sell for less than 25,000 yen ($211). It was a tall hurdle. But unless you start off with a target, you can't control costs and you'll inevitably lose money. Also, we thought a low-cost console would make moms happy."
NAND is a type of flash memory. Read before you type.
http://www.webopedia.com/TERM/N/NAND.html
Riemann Lebesgue @ Nov 17th 2006 8:17PM
gman, YOU try reading before you type, bud. I never jumped on them for saying NAND. I was criticizing Joystiq for not including the second part of what he said, "and other pricey parts". It's very misleading to not include that second part. That was clearly indicated by my post (I even emphasized it by putting "and" in caps), so next time, please use your reading glasses.
number40one @ Nov 17th 2006 8:32PM
Sorry guys, but if it really already costs less than $100 for them to make the Wii (if you factor in all the development costs for the motion interface, which you geniuses aren't), Nintendo would sell it for $150-to-$175... putting it well below the home-tech "impulse buy" threshold, and resulting in it being hooked up to nearly every television in America.
Falafelkid @ Nov 17th 2006 8:40PM
Can I just claim this $99 rumour, please? You heard it from me first, back in October 2005: http://nintendo-revolution.blogspot.com/2005/10/revolution-to-be-least-powerful.html
Back then, even Joystiq carried my story: http://www.joystiq.com/entry/1234000407062281/
Sorry to brag ;) It is all an ambitious little blog like mine can do.
Ritz @ Nov 17th 2006 8:49PM
Spartacus,
While not written in any sort of stone, there is a general idea of what is a fair AND reasonable price for a gaming console. Thanks to Sony putting to much brand new technology into their machine, not only do they break this price barrier but they also still forced to take a massive loss on each system. Bad for Sony, bad for the consumer.
Nintendo offers a system that sits below this price barrier, by around $50-$100 for the consumer. And yes, Nintendo makes a profit, but remember what Vlad said: "The ultimate profitability of a game manufacturer is no concern of ours, as gamers". So why care if Nintendo earns a profit? It just means we as consumers have hope at a price drop sometime in the near future, relatively speaking compared to when Sony can afford to try the same.
You still have the option of purchasing a system at a much lower price point than the PS3 or 360 (ignoring their crappy low end systems).
aka Bitter @ Nov 17th 2006 8:52PM
@#12 Number40one: It's not necessarily true that Nintendo would sell the console for cheaper if it cost less to make. An argument could be made that Nintendo actually INCREASED the price of the Wii after learning of the PS3 price at E3.
The reason? Implied value.
By costing significantly less than their competitors, there could be a perception that the system was not as capable or a bad purchase(ala Virtual Boy)... and no one wants to throw away $100.
My gut feeling is the system was going to be $199(for the console only) before the PS3 price was announced.
Grant @ Nov 17th 2006 9:02PM
There's more value in the Wii than simply adding up the cost of all the hardware components. There is value added by COMBINING and INTEGRATING those components into an efficient, original design. If all you guys care about is what parts are in the Wii, you'd go out and by those parts yourself and make your own Wii for cheaper. Technology like this is more than the sum of its parts. Not to mention the value added by the fact that the Wii has an exclusive deal with the best game developer in the world (imo.)
By the way, I'm sure Nintendo will drop the price next year before too long, probably to $199. Of course they're going to price it high for the holiday season.
RetroJunkie @ Nov 17th 2006 9:10PM
@8
Man Fries you're on a roll of undeniable idiocy
Hey bud do me a favor, you find me the same tech that the wii has, the motion sensor's and all that jazz, and tell me how much you spend on it
If ANYTHING is a gimmick here its Sony OH SO AMAZING "SIXAXIS" which, COULD OF HAD RUMBLE, but You know how sony is
Hey maybe if we're all lucky, you won't wake up from that sleep of yours
Maybe Nature will kick in and Even everything out
But while I'm Taunting your attempts at proving a point, What Proof would that be?
The fact that Nintendo chooses to make a profit?
The Fact that Nintendo couldn't keep the Wii at the price point they originally wanted?
I fail to see how "THIS PROVES ITS JUST A GIMMICK"
Now it just seems you're talking out your ass
Burnt Meatloaf @ Nov 17th 2006 9:26PM
$100 is kind of pushing it.
I have a feeling that the much rumored $170 price tag was supposed to be the target, but when the "real" XBox360 launched at $400 and the PS3 was announced to start at $500, Nintendo said to themselves, "Ah, screw it! Let's charge more!"
When the price wasn't announced at E3, I knew it was going to sell for $250. There was no reason they couldn't charge that much.
Hopefully, this will bite them in the end. I don't want to see a flood of companies trying to sell obsolete hardware at rediculous prices because it has one feature that "seems" like it costs a fortune to people who don't know better (accelerometers, in volume, cost about 50 cents, an expense easily offset by the lack of an analog stick).
I have nothing against their software, but this recent penny-pinching has gotten completely out of hand, even with Zelda, their flagship title.
And then people say Microsoft and Sony are greedy bastards.
Burnt Meatloaf @ Nov 17th 2006 9:28PM
*Spartacus: "While it may end up being a great product, the hardware just isn't worth that much"
A product costs what people will pay. Manufacturing costs have nothing to do with it. Why do people pay $300 for a pretty, over-glorified, and generally unreliable music player from Apple? Fads are cash cows, that's why.
Richard Williams @ Nov 17th 2006 9:28PM
Too bad Nintendo put short term profits before long term viability. If they had "subsidized" their console like MS and Sony, and kept the price below 150, I think that in the long term they would be the winner or this generation, but now I think they have relegated themselves to a 3rd place finish.
angelsnecropolis @ Nov 17th 2006 9:35PM
Everyone needs to quit bashing on Nintendo because they want to make money. People don't go into the business world saying "Today is a glorious day! I hope I lose lots of money!" Of course they want to make a profit. Everyone wants to make a profit. Profit is not some sort of demon. Its called paying the workers, developers, designers, and everyone else involved in the creation process. The cost of the Wii is NOT just the cost of its hardware.
Spartacus @ Nov 17th 2006 9:36PM
@ Kata, Ritz, Grant and others:
I said that the Wii hardware wasn't worth the pricetag in MONETARY terms. I made it very clear that overall value was in the eyes of the beholder. In ANY book, getting a product for LESS than it cost the manufacturer to make it= a good deal, while getting a product with a 50-70% markup= not so good of a deal. Sure the Wii costs less, but VALUE is more than upfront cost. If that's your basis of value, then buy a PS2. It's tons cheaper than a Wii, has an infinitely larger game library and since graphics don't matter to Ninty fans anymore, the fact that it has a slightly lower resolution and pixel count shouldn't bother you.
For the record I don't think the PS3 is a particularly good deal. I think it's horribly priced. But it is such because Sony made a lot of bad decisions when deciding what components to use, not because they jacked up the profit margin. Should Ninindo be criticized for practicing capitolism? No, but in the world of gaming, the most cutting edge hardware is usually king. Try to pass off a Pentium II PC with an on-board GPU and a "nifty controller" to any experienced gamer as a "great value" and you'd get laughed at. So I think a FAIR amount of criticism is called for in regards to Nintendo.
dje7878 @ Nov 17th 2006 10:08PM
just shows that the wii is nothing more than a beefed up, redesigned gamecube that makes you flail your arms around to play games. in the present day where HD is the new hotness, teh wii outputs at a glorious 480p.,, $100 console? yeah.
Kouheikun @ Nov 17th 2006 10:08PM
On one hand there are people who laugh the Wii off as a gimmick because of its low price.
Now we have people calling Nintendo out for charging consumers too much.
I'd say Nintendo got the price just about right. Pricier than the Dreamcast and GameCube ($200 at launch), but less expensive than the PS2 and Xbox ($300 at launch).
rockintom99 @ Nov 17th 2006 10:15PM
@zeldax
It costs a hell of a lot more than $250-300 to make a ps3. Remember, it is not *only* the graphics card/blu ray player that make up the entire damn thing.
BPM? @ Nov 17th 2006 10:24PM
Why do people fail to understand the following two concepts:
1) We don't KNOW what the Wii costs to build (on a purely hardware parts level, not including manufacturing and packaging costs).
2) They probably spent a lot of R&D money to come up with the Wii as it currently stands (the Remote which can be infinitely expanded upon, system with different features called "Channels", etc).
Yes, Miyamoto said they wanted to make a $100 system, but WANTED TO and DID SO are two completely different things.
Both the hardware and software have costs.
And really, what's so wrong with turning a profit on the system? Even so, we don't know how much is profit. Maybe they make $50 off of each Wii, or maybe $5. Less likely the latter, but the point is, we don't know.
If you knew you could sell something for a profit and still get a lot of customers, would you sell it for a loss?
Microsoft and Sony aren't in the same spot, because their hardware is pricier (though, Microsoft now turns a $75 off each 360 now. Gonna demand they drop the price of it now?). For them to have sold their machines at a profit (Sony of now, and Microsoft at launch), how many people would buy them? Probably much less than there already is.
There are valid criticisms of what Nintendo is doing, though. The price of the Wii is not one.
However, the price of other things are:
1) Virtual Console. An unmodified NES VC download costs the same as a PS1 download from PlayStation Store or an updated port of arcade games on Xbox Live Arcade? And why are we paying more for Genesis games than Japan? Sure, it's only 200 Wii Points more ($2 USD), but it's the principle of it!
2) Controller prices. $40 for an additional Remote. And then $20 for the Nunchuk and Classic Controller attachments.
Other valid criticisms:
1) Lack of rumble for Virtual Console. Hopefully they can fix this with a firmware upgrade.
2) Lack of DVD playback from the beginning. Sure, it isn't a game-centric feature, but the Wii would've made a nice portable DVD player. And it has a controller better fit for DVD playback than 360 or PS3!
3) Lack of Wi-Fi Connection support for initial titles. Wii Sports, Excite Truck, Metal Slug Anthology, and Super Swing Golf PangYa would've been GREAT to have online!
So... Yeah... I've lost my train of thought...
number40one @ Nov 17th 2006 11:31PM
@ BITTER
I whole heartedly agree with you, to an extent... which makes it not really whole heartedly I guess...
I think they're pricing at $250 now because they can. Most likely their entire current stock is earmarked for someone (either currently, or in their December credit card statement). I too thought it was going to go for $199... and I think it will soon after the new year.
rubaiyat @ Nov 17th 2006 11:32PM
I agree with some of the points, but the Xbox controller and likely the PS controller are going for $50
So $69 bucks for Wiimote+Nunchuck is not entirely off base.
Zach @ Nov 18th 2006 1:01AM
"Other valid criticisms:
1) Lack of rumble for Virtual Console. Hopefully they can fix this with a firmware upgrade.
2) Lack of DVD playback from the beginning. Sure, it isn't a game-centric feature, but the Wii would've made a nice portable DVD player. And it has a controller better fit for DVD playback than 360 or PS3!
3) Lack of Wi-Fi Connection support for initial titles. Wii Sports, Excite Truck, Metal Slug Anthology, and Super Swing Golf PangYa would've been GREAT to have online!"
The first two are not valid criticisms. The third one is, however.
1) Rumble isn't nearly as big of a deal as most people make it out to be. Everything was just peachy before rumble, and it wasn't a revolutionary advance in the sense that analog sticks were, so I don't see why everyone gets bitchy about things not having it.
2) The Wii isn't meant to be a DVD player. Besides, I have 5 DVD players: 3 stand-alone players, a PS2, and a Xbox. Gaming consoles aren't meant to be media hubs. They are meant to play games, and that's all I want to do with a system. Including things like DVD playback and Blu-Ray drives only drives prices up.
Burnt Meatloaf @ Nov 18th 2006 2:18AM
*angelsnecropolis: "Everyone needs to quit bashing on Nintendo because they want to make money."
The question is how much. I don't agree with subsidization strategies, but there's a pretty big difference between breaking even at launch and making (possibly) up to a hundred dollars profit per system.
As usual, the Nintendo fanboys discredit the tactics of other console manufacturers by going to the other extreme. Gamecube was efficient and moderate. Wii isn't -- by a longshot.
*BPMΩ: "1) We don't KNOW what the Wii costs to build (on a purely hardware parts level, not including manufacturing and packaging costs)."
Nintendo is going to great lengths to make sure people not involved in hardware can't guess. How many investment firms have summed up the costs of the PS3 and 360? Lots. How many have done so with the Wii? None.
Anybody who knows beans about hardware knows this thing is damn cheap to make, and I work closely with people who build custom ICs.
*BPMΩ: "2) They probably spent a lot of R&D money to come up with the Wii as it currently stands (the Remote which can be infinitely expanded upon, system with different features called "Channels", etc).
HAHAHA! You're funny. If you think Nintendo bothered to make a new architecture to get such paltry improvements, you're out of your mind.
We all know how much money it costs to add a serial bus and a plug, which is why the console doesn't have Ethernet, apparently.
People can endlessly argue about value, but nobody should believe that this system cost a lot for R&D.
How many people think they should pay $25,000 for a Honda Civic because Honda obviusly spent a LOT of money tooling the injection molder for the cupholder? It's still cheaper than an SUV! For a person who doesn't know how much the Wii costs to make, you sure are trying hard to make excuses for them.
*Zach: "Including things like DVD playback and Blu-Ray drives only drives prices up."
Some people say DVD is so cheap they have 10 players in their house. Some people say DVD costs too much so extending a console with some kind of firmware update is impractical. Does anybody really know how much the license and verification costs?
epobirs @ Nov 18th 2006 4:45AM
#30
BM, Just be patient, the teardowns from groups like Portelligent or iSupply will appear soon enough. First, they have to have the Wii in their custody to conduct a thorough examination. Second, the reports see their first public exposure in trade publications like EE Times. Since they'll only carry one such article a week it still remains for the Wii teardown to appear.
The R&D cost for the Wii are a very real expense for Nintendo and are reflected in the launch price. Comparing it to a car's cupholder is hardly. Honda can and does whenever possible share parts among numerous models. The most notable portions of the Wii were developed from scratch atop the existing GameCube base. Starting entirely from scratch would only have addded needless additional cost to no benefit.
The cost of the box and its content on a retailer's shelf is only the starting point. There is significant investment to recoup before the pricing calculation can be so simplified. For instance, the cost of the die shrink and modification (mainly the addition of more embedded RAM) to the GameCube chipset was not free. Masks for 90nm chips are quite expensive and it's unlikely the first try was perfect and needed no successors. Thats a few million in the hole right there before a single viable full spec unit of the chipset has come off the line.
The Wii's internal hardware development was greatly less expensive than the PS3 but still not an endeavor for anyone without a lot of capital resources they can tie up for long periods before revenue starts coming in on the product.
All of these expenditures are closely tracked and Nintendo knows down to a few thousand units how many Wiis must be sold before the development costs are met. When that point is reached, then they can start considering a price reduction at retail. If things go according to their plans this will come well before the early momentum from the launch winds down and consumers need a new incentive to take interest in the Wii.
"Does anybody really know how much the license and verification costs?"
Of course they know. Microsoft knew exactly what it was doing when it chose the price for the Xbox's DVD playback add-on. Anybody can go to the DVD Forum and get licensing data for a proposed volume of units.
The critical issue is that it isn't free. There is a playback license (which decreases over volume growth) and the cost of the software support itself. Since it would be needlessly costly to develop inhouse, Nintendo would get this from any of about a half-dozen specialists in that field, much as they did for web browsing support.
Thus it makes sense to offer DVD playback later on in a high-end SKU, and/or as an add-on to the existing SKU but at this late date with the extreme saturation DVD playback devices in homes, it just doesn't make sense to increase the cost of a product already carrying a considerably higher price than originally intended.
Not that the price should last very long. Once the initial one-time costs are recouped, Nintendo is in a position to drop the price rapidly while remaining profitable. I would not be surprised to see a $150 price for the base product within two years of launch. Other tactics, like bundling of software, may be used to try keeping the price up but the viability of that depends of how soon Microsoft cuts its price and puts pressure on Nintendo to maintain its low cost of entry lead.
Speaking of Microsoft, there is a serious misunderstanding going around from that iSuppy report. The $325 price given was for the hardware in the package, not for the entire cost incurred before handing it off to the retail channel. The profit margin for the Xbox 360 is far less than the $75 people have started throwing about. If the wholesale price paid by retailers is still a few dollars short once costs like marketing are added, that is still a huge improvement over the costs at launch, including all of the one-time costs.
Microsoft is no longer digging a hole with each Xbox 360 sold but the console is not a profit center in of itself. If the company was genuinely clearing over $50 per machine, we would have seen a $50 price drop. Retailers and consumers alike would have loved it and every bit added to the installed base before the PS3 is truly available to casual shoppers would have been an important gain. If MS were in the position to do that, they would. A $299 Gears of War bundle would have been a real marketing victory.
But a die shrink of the chipset is underway. When that version of the console is in production, then a serious price cut should happen. I'd expect they're hoping to have this ready before PS3s are easy to find globally.
bobbycor1975 @ Nov 18th 2006 5:27AM
oh btw. Microcenter has the 1 gb sd cards on sale as bulk packaging for 16 dollars. I have a couple for my camera and pda. Guess I can get one now for my wii. http://www.microcenter.com/single_product_results.phtml?product_id=242479
snapperdragon @ Nov 18th 2006 11:12AM
I'm an old-school gamer: I started with the Atari 2600.
The best games (IMHO) on that were the 2 player ones. Competing with someone sitting next to you was great fun. Reflexes, quickness, predicting...these were all things that made gaming fun with friends.
These days, we have 40 hour single player experiences (which were not possible in the past due to tech) and multi-play over the internet. Sure, these are fun too, but I think they come at the expense of playing against friends right next to you.
I think the Wii, with it's controller especially, will possibly allow gaming to be a fun group oriented activity (like some of the party games -- I haven't played any of them tho) more so than either 360 or ps3. I think the controllers will allow for that possibility.
Of course, all this has yet to be proven by the games that are released. The Wii may fall flat on its face.
On another topic, of buying a console based on how much tech you get for the money...is this really what makes the system valuable to you? I don't know.
It comes down to the games, of course. If the system is so tech heavy and elitist that most of the gaming public cannot afford it, then I think most of the games will cater to the current installed base (hardcore gamers). In addition, due to the low installed base, gaming companies will not be able to take as many risks with games and will tend to follow more of a previous approach (meaning rehashed games).
I think Nintendo is doing ok at pricing the Wii at 250 because it now gives them the opportunity to make profit (which will keep them healthy and allow them to create more games) and also gives them a lever to use against the competitors in price wars when needed. Consider that you cannot negotiate if you start too low...
In the end, we have 3 different systems and approaches to choose from. There is no need for 1 system to dominate and kill off the others. Whatever system you buy, you want to be assured that there will be a steady stream of good quality games for it so that your investment in the hardware continues to pay off over the course of it's life.
Bruce @ Nov 18th 2006 12:27PM
I have often read that it costs 20 dollars to get a dvd license. So no DVD player can be less than 20.
LipeCau @ Nov 19th 2006 9:18AM
I really hope that the wii w/o wiisports is sold for $200, but wii sports is not just a nintendo title (that's priced $40) but it's also a minor title, so it'll be kept around $225. I was a little disapointed, but for what sony offers on ps3, it's not overpriced, it has more things then you really need without giving you the option like you (kind of) have with the 360.
I'm disapointed with all the prices, each by their reasons
Pretty Obvious @ Nov 19th 2006 1:10PM
I completely agree with #1 and for me to even consider the Wii in the least bit it would have to be $150. $250 is absurd for this console. Outdated hardware and no dvd playback even though the system has a dvd drive??? I dont care how many dvd players I have, for $250 this thing shoulda had playback.
Nintendo is gonna make a killing on the Wii with the rape theyre giving to its fanbase.
UltraSPARC @ Nov 19th 2006 5:14PM
This is to the person who said the PS3 only costs $250 to make... According to iSuppli, Sony is loosing $300 on the 20GB drive, and $250 on the 60GB model... That's right the PS3 costs more than $800 to make.
Here's the link!
http://www.theinquirer.net/default.aspx?article=35784
This is a big gamble for Sony, as they will be royally screwed if A. people don't buy games and more importantly B. if Blue-Ray doesn't pick up!!!