3DS Components cost about $100

[Terminator02]

UBM TechInsights has done a teardown of the Nintendo 3DS and marks the total cost of the system's hardware at $101. That's $15 more than the DSi was reportedly made for, though the 3DS also includes a 3D screen and a gyroscope, along with other enhancements.

Retailers are selling the 3DS for $250, but that's not all markup -- there are marketing, research and other charges associated with a console release, and everyone in the supply chain has to take their own cuts, of course. Still, Nintendo is likely making a profit on every unit sold, which is exactly as expected (and what it did with the Wii). Even before you start talking about games and licensing, Nintendo is making sure there's some money rolling back its way from day one.[/p]

Source (Joystiq)

 

[Deleted member 473940]

I am sure I have seen a few threads relating the manufacturing cost.
Also loads of discussion regarding this

 

[Zarcon]

This isn't really surprising. Nintendo has always sold their machines at a profit.
Always.

And as they say, keep doing what you can get away with until you can't get away with it any longer.
And at this rate, they'll just on doing it for a long, long time.

 

[Deleted member 473940]

LOL Ya.
Compared to Sony, they do make a lot of profit regarding their console system.

I wonder how much it costs them to make Gameboy Advance.(because micro was built years after it, just to compare the built price

)

 

[Hop2089]

Nintendo usually knows what they are doing and often employs a few cost cutting measures without sacrificing system quality. It pretty much would explain how they are making a slight profit off each unit sold.

 

[Sausage Head]

I'm sure I've seen a post like this before...

 

[Recorderdude]

The nD costs $10 to make.

And that's how much its costs to buy.

IT HAS BUTTONS.

 

[KingVamp]

The nD costs $10 to make.

And that's how much its costs to buy.

IT HAS BUTTONS.

It doesn't cost $400!!!

Yep, seem like a fair price.

I do not see how some people expect Nintendo to put everything in the world at it fineness in one device and sell at a lose.

 

[twiztidsinz]

Not surprising... And before all the people say "well duh! what about the ASSEMBLY costs!?!?!", there's a big to-do going on in my state (MA) about a company who got a bunch of money from the state to manufacture Solar Panels which would have created jobs... but those jobs are being sent to China.
The company defended it's action by saying something along the lines of "it's a cost cutting measure" and brought up that they'd have to pay workers in the US $25/hr for labor, but in China they pay the workers $2.50/hr.

The nD costs $10 to make.

And that's how much its costs to buy.

IT HAS BUTTONS.

It doesn't cost $400!!!

Yep, seem like a fair price.

I do not see how some people expect Nintendo to put everything in the world at it fineness in one device and sell at a lose.

It's called "subsidizing", and pretty much every other manufacturer (aside from Apple) that has 'addons' or service fees does it.
Cellphones are a great example of this, you can get a cellphone for $100 with a 2 year contract, but that phone costs about $500 or more.

 

[KingVamp]

It's called "subsidizing", and pretty much every other manufacturer (aside from Apple) that has 'addons' or service fees does it.
Cellphones are a great example of this, you can get a cellphone for $100 with a 2 year contract, but that phone costs about $500 or more.

But I do not want to be bound by a contact.

 

[Terminator02]

It's called "subsidizing", and pretty much every other manufacturer (aside from Apple) that has 'addons' or service fees does it.
Cellphones are a great example of this, you can get a cellphone for $100 with a 2 year contract, but that phone costs about $500 or more.

But I do not want to be bound by a contact.

me neither, i always get nervous when i have to talk to someone

 

[SPH73]

$101 = Cost of Goods Per Unit (which is only a rough estimate made by a site that doesn't know how much Nintendo is actually paying for parts.)

+Die Cutting, Plastics (Very costly)
+Packaging (costs more than you think)
+Manual Printing (ain't cheap)
+Shipping (Shipping units by the millions = extremely expensive)
+Marketing + Advertising (really, really expensive)
+R&D Costs which must be recouped before it can really be considered "profitable"

= A lot more than you think. This is the REAL cost of the 3DS.

Articles like this one are usually written by people who have no actual insight into Nintendo's manufacturing process. (Hence their frequent use of the word "estimate.") They are basically looking for that "knee-jerk" reaction from a reader who sees the headline and thinks "$100?!?!" and then clicks the link. Meanwhile the author seems completely ignorant to the "real math."

 

[twiztidsinz]

It's called "subsidizing", and pretty much every other manufacturer (aside from Apple) that has 'addons' or service fees does it.
Cellphones are a great example of this, you can get a cellphone for $100 with a 2 year contract, but that phone costs about $500 or more.
But I do not want to be bound by a contact.Sony and Microsoft do this with their consoles too... Sega did as well.
They sell you the console at a loss, and make a profit on the software.



QUOTE(SPH73 @ Mar 31 2011, 05:49 PM)

$101 = Cost of Goods Per Unit (which is only a rough estimate made by a site that doesn't know how much Nintendo is actually paying for parts.)

+Die Cutting, Plastics (Very costly)
+Packaging (costs more than you think)
+Manual Printing (ain't cheap)
+Shipping (Shipping units by the millions = extremely expensive)
+Marketing + Advertising (really, really expensive)
+R&D Costs which must be recouped before it can really be considered "profitable"

= A lot more than you think. This is the REAL cost of the 3DS.

Articles like this one are usually written by people who have no actual insight into Nintendo's manufacturing process. (Hence their frequent use of the word "estimate.") They are basically looking for that "knee-jerk" reaction from a reader who sees the headline and thinks "$100?!?!" and then clicks the link. Meanwhile the author seems completely ignorant to the "real math."

Either they're ignorant of the real costs, or you're ignorant of the whole "teardown" thing and them stating (usually multiple times) that this is the cost of PARTS.
You're not going to include packaging, manuals, shipping, marketing, advertising, research, etc in the cost of the PARTS because they are not PARTS of the device (they would fall under 'accessories' and/or 'packaging').

 

[jesterscourt]

Not to redux everything already in this post but:

Nintendo has always MADE money on their consoles, not selling them as a loss leader to be made back on accessories and games (poor Sony)

R&D and licensing costs were in the millions, and there is the whole aspect of putting the things together, testing, developing software, and oh yeah, marketing.

 

[SPH73]

Either they're ignorant of the real costs, or you're ignorant of the whole "teardown" thing and them stating (usually multiple times) that this is the cost of PARTS.
You're not going to include packaging, manuals, shipping, marketing, advertising, research, etc in the cost of the PARTS because they are not PARTS of the device (they would fall under 'accessories' and/or 'packaging').

You just proved you know nothing about this business.

Cost of goods alone doesn't give you an accurate picture of how much profit a company makes on a certain product, which is the intention of this somewhat misleading article. They're trying to imply that Nintendo is making a huge profit when they haven't even factored the rest of the costs. They even stupidly try to give themselves an out by saying "well there are other costs hurr, durr" but they don't tell you what they are.

All of the things I mentioned are valid. And you can't consider profit until you've factored all these other costs. Its just that simple. If you think otherwise, you're wrong.

By the way its called "cost of goods" not just "parts." And there are extremely high costs that come before you can even assemble the product. Cost of goods only includes the pieces necessary to build the machine. Often it does NOT include packaging and die costs. Die costs alone are extremely expensive.

QUOTE(twiztidsinz @ Mar 31 2011, 06:04 PM) Sony and Microsoft do this with their consoles too... Sega did as well.
They sell you the console at a loss, and make a profit on the software.

Actually MS learned their lesson with the OG Box. They've been selling 360 at a profit since roughly the end of the first year of the consoles life. (google it)

As for Sony, they've never made a profit on the PS3.

http://www.vg247.com/2009/10/30/sony-ps-di...-launching-ps3/

Financially the PS3 is a complete failure. And since this article was published in late 2009 they've lost even more money. (Which you can confirm for yourself by checking their publically available financial reports)

The PS3 is such a financial failure someone in Japan (sony's home turf) actually wrote a book called "Why the PS3 failed."

http://www.maxconsole.net/showthread.php?7...-the-PS3-failed

As for your claims about Sega... links? source?

 

[Terminator02]

it was sometime mid last year sony said they were finally making a profit on the ps3, and as twiztidsinz said, this is purely the components, did u read the second paragraph in the OP?

now stop trying to make a big fight

 

[lompoc]

arcade uprights cost 5000 and 3ds has bomb graphics so it cost same but portable do the math

 

[SPH73]

it was sometime mid last year sony said they were finally making a profit on the ps3, and as twiztidsinz said, this is purely the components, did u read the second paragraph in the OP?

1. Sony making a "profit" on the PS3 does not mean they have recouped the massive 4.7 billion dollar losses they posted in 2009. (Or the losses they have incurred after that point.)

2. The second paragraph is exactly what's wrong with this article. Basically the author is writing a sensationalist piece saying "Well 3DS COG is $101." And he implies heavilly that Nintendo is making a large profit. But then to cover his sloppy journalism he says "well there are other costs" and implies he doesn't know what those costs are.

My first post in this topic is the most accurate cost break down for any piece of hardware. The only thing I forgot to include is the retailer cut, which on hardware is traditionally small. You can't estimate profit until ALL these things are considered.

BTW, no one is trying to cause trouble here. If you can't take serious, informed discussion on the business of gaming then you shouldn't post articles like this one.

We're not all ignorant of the manufacturing world. (I should say at this point that I've been testing a video game related prototype for the past 4 months.)

As for Nintendo... I once had a Nintendo rep tell me "we could sell the GCN for $50 and we would still make a profit." Of course that was when the GCN was selling for $100

 

[twiztidsinz]

Actually MS learned their lesson with the OG Box. They've been selling 360 at a profit since roughly the end of the first year of the consoles life. (google it)Ok... let me break it down simply. The "sell for a loss" means initially.

Microsoft isn't making a profit because of anything they've learned, they're making a profit on their console because the cost of the parts and to produce them have decreased more than the console cost has.

As an example, I develop the Gamestation 360.
Each console has $190 in parts, $50 in labor and manufacturing, $50 in R&D and $25 in distribution.
Each console costs me $315 to make, so I sell it at $300 and sell it at a loss of $15.
After a year a new way to make a similar chip is found that saves me $15 in parts and $5 in labor, but I keep the price at $300, I am now making a profit of $5 per console.
I still sold the consoles at a loss and to truly start see any profit from the console, I will need to sell 4 new units for every old unit I sold.


QUOTE(SPH73 @ Mar 31 2011, 06:22 PM) As for your claims about Sega... links? source?

I'd have to dig up sales numbers and stuff, which I really don't care to do.
This is a standard practice taken by many hardware manufacturers that also produce software. Even without proof/evidence, it's more likely for Sega (especially Sega) to have done this, considering they were arguably one of if not the most advanced home console developer for a while. Look at the SegaCD, the Saturn and the Dreamcast.

 

[SPH73]

Actually MS learned their lesson with the OG Box. They've been selling 360 at a profit since roughly the end of the first year of the consoles life. (google it)Ok... let me break it down simply. The "sell for a loss" means initially.

Microsoft isn't making a profit because of anything they've learned, they're making a profit on their console because the cost of the parts and to produce them have decreased more than the console cost has.

As for your claims about Sega... links? source?I'd have to dig up sales numbers and stuff, which I really don't care to do.
This is a standard practice taken by many hardware manufacturers that also produce software. Even without proof/evidence, it's more likely for Sega (especially Sega) to have done this, considering they were arguably one of if not the most advanced home console developer for a while. Look at the SegaCD, the Saturn and the Dreamcast.

The stuff you said about MS, although completely valid, is painfully obvious and doesn't need to be explained to anyone.

The stuff you said about Sega proves you don't actually know what Sega was doing 10 years ago when they produced the DC.

And none of this negates the basic logic of my posts, which are all still completely valid. (They also negate and expose the truth behind this article. If you want to know the real truth, read the article then read my posts.)

Concerning this article I guess I should say this... the business of gaming "journalism" has never been about telling the truth. Sad but true.

QUOTE(twiztidsinz @ Mar 31 2011, 06:47 PM)

Each console has $190 in parts, $50 in labor and manufacturing, $50 in R&D and $25 in distribution.
Sell it at a lost of $15

1. There are a LOT of costs missing here. (Retailer cuts, packaging, advertising, printing, die costs, etc)

2. Originally Sony was selling the PS3 at a loss of $200 per unit. (Assuming you believe the claims that said PS3 COG was close to $800)

Selling hardware at a loss doesn't always work. (IE, Sony's 4.7 billion dollar loss in 2009) This is why Nintendo wisely avoids that suicidal strategy.

I'm willing to bet that Sony won't take this route with the PS4. (Aka NGP)