Nintendo making a loss on 3DS hardware following price drop

Discussion in 'User Submitted News' started by heartgold, Jul 28, 2011.

  1. heartgold
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    heartgold GBAtemp Psycho!

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    Bloomberg Japan reports today that the new 3DS price point means Nintendo will incur a loss on every system sold. At a press conference in Osaka today, Nintendo CEO Satoru Iwata justified this by saying that such major moves were necessary in order to improve fiscal performance next year and beyond.

    Nintendo slashed the price of the 3DS earlier today worldwide. In Japan, the system was cut from its launch price of ¥25,000 to ¥15,000. Early adopters who paid the initial price will be given access to 20 free Famicom (NES) and Game Boy Advance Virtual Console games, some exclusively.

    In addition to the price cut, Nintendo announced lowered earnings targets for the year. SMBC senior analyst Eiji Maeda told Bloomberg that 40% of the lowered revision was due to the 3DS price cut. Securities Japan analyst Masayuki Ohtani expressed surprise at how quick the price cut came.

    Ohtani also suggested that investors might rush to sell Nintendo stock, although he doesn't believe the stock will drop below 10,000 yen. Nintendo stock ended the day at 14,000 yen, up 0.1% from the day prior. On the 27th, one day before the price cut and earnings report announcements, the stock had temporarily dropped to 13,770 yen, its lowest point since December 2005.[/p]

    Wow

    Source

    Japanese Source
     


  2. machomuu

    machomuu Drops by occasionally

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    Things sure are getting interesting.
     
  3. Tonitonichopchop

    Tonitonichopchop GBAtemp Maniac

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    Nintendo's a big company. As long as they can get back on their feet, they'll be fine.
     
  4. Guild McCommunist

    Guild McCommunist (not on boat)

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    Now to wait and see if Sony decides to take a loss on the Vita.

    (For the record, I believe they said they are not taking a loss on the Vita currently).
     
  5. machomuu

    machomuu Drops by occasionally

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    I doubt they will.
     
  6. Guild McCommunist

    Guild McCommunist (not on boat)

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    Did you think Nintendo would ever do this? Plus Sony did take a loss on the PS3 Slim which was a rather good success for them.

    I doubt they'll do it at launch, but they'll probably see how it fairs with a $250 price tag vs. a $180 price tag and then cut the price accordingly if sales are bad.
     
  7. pistone

    pistone GBAtemp Advanced Fan

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    in your heart...coz secretly you love me !!!!
    this is a marketing quote ...nintendo lose on .....what?.....consoles ...........for me is the first time that i hear this,
    from what we know the 3ds product-cost may be like 150$ and nintendo was selling that at 250$ so ,for me is still printing money this was done purely for increasing the sales ........meaning more developers meaning more sales.........i dont think this is done for the "vita" ........wanna bet that when psv is out nintendo will release a 3ds lite ?
     
  8. machomuu

    machomuu Drops by occasionally

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    I'm just saying, it's more of a thought than a "researched answer".
     
  9. gamefan5

    gamefan5 Kid Icarus Uprising connoiseur

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    Lol. It's definetely getting interesting to say the least.
     
  10. godreborn

    godreborn GBAtemp Addict

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    actually, it has been determined that the 3ds costs less than $100 to make. if something similar happens with the wii-u, it spell disaster for the company. since they r the only console developer to sell their product at a profit at launch. much of the wii's revenue was from hardware sales. with the wii-u, nintendo may have to rely on third-party support much more so than in the past. this is probably a good thing though. nintendo may finally get their act together and care about third-party support.
     
  11. DiscostewSM

    DiscostewSM GBAtemp Psycho!

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    Understand this before commenting on my post that currency exchange rates are not a final say of comparisons between currencies of differing regions. I'm just using them as an quick way of examining things.

    If Nintendo would be selling at a loss here, then if the combined hardware of the 3DS costs Nintendo $101 each to purchase (which doesn't include assembling, testing, royalties, etc), then in the US market, it costs more than $69 per unit outside of hardware costs? In Japan, the price is going from 25,000 yen (approx $321.20) to 15,000 yen ($192.72). Using the base of $101 (7,861 yen) hardware costs, would that mean it costs more than $91.72 (7,140 yen) to finalize each unit after hardware costs? Those numbers seem a bit high to me.

    Of course, the estimated $101 for parts was back around when the 3DS first launched, so the price of the hardware may have gone down since then, and will continue to do so.
     
  12. SamAsh07

    SamAsh07 GBAtemp Addict

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    The move is quite understandable, it was inevitable that if they cut their systems price now, they WOULD most certainly incur a loss, but that's ok, big companies always work with the "long run" in mind of how much profit the 3DS will give in the next fiscal year. To sum it up, they are doing a great job.
     
  13. Schlupi

    Schlupi Gbatemp's Official Earthbound Maniac™

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    This isn't right. If I recall correctly Nintendo said it costs them 100 dollars or so in resources and parts to make a 3DS. They are STILL making profits overall; and with their multi-million dollar game sales coming up (holidays BRO) they aren't suffering at all.

    OMG THE 3DS ONLY RAKED IN A BILLION DOLLARS THIS YEAR WE WANTED QUADRILLION

    Seriously, Nintendo. Thanks for the price cut and bonuses but don't mislead customers? Or whoever wrote this article. Plus you have to account for currency exchange rates, worldwide sales, etc. It's not so simple.
     
  14. prowler

    prowler Sony

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    It's counting Yen so it's just counting Japanese sales... where it matters.
     
  15. ShawnTRods

    ShawnTRods GBAtemp Psycho!

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    Ya thats what I thought.
    With the time, I am sure the hardwares used are getting cheaper and cheaper. So whats the problem o.o.
     
  16. jonesman99

    jonesman99 GBAtemp's Official ArchAndroid

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    I figured this would happen, but not now, not like this, or by that much.

    I figured that it would happen later, closer to the release of the Vita, to get in those holiday sales. You know, their seasonal $20-30 price drop.

    Maybe they are getting in tune with the world market?
     
  17. TehSkull

    TehSkull Living the life

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    Shiiit. This article was probably sponsored by Nintendo to make us tempers feel guilty for pirating.
     
  18. Hyro-Sama

    Hyro-Sama I'm from the fucking future.

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    Nintendo most likely hopes that they can make money from Online Features and game list that they keep bragging about.
     
  19. jonesman99

    jonesman99 GBAtemp's Official ArchAndroid

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    Pirating? Pirate what? We haven't even been able to crack the 3DS yet! [​IMG] Maybe they are about to pull a Capcom and announce a new revision of 3DS Ultimate next month... [​IMG] [​IMG]
     
  20. Zarcon

    Zarcon .:~Enigmatic Wanderer~:.

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    They probably just said they'll see a loss in profit.
    In this day an age, for some reason that means a loss period.

    "OH NO! COMPANY X SAW A 50% DROP IN PROFIT! THEY'LL BE BANKRUPT IN NO TIME!"
    You see this kind of kneejerk reaction all the time.
    Even though a 50% drop in profit might still be profit if the original target was anything above 1%.
    50% of 1% profit is still 0.5% profit.