Topic: Should Nintendo lower 3DS prices because of the Vita?

[Ymeegod]

"CEO in Japan only earns 11 times the average workers wage compared to Americas 475 times, the cost of the managers in assembly is negligible.
"

Actually the higher ups do get alot less on books but you fail to realize that in Japan you don't have to report any of your "bonuses".  But yeah, Japanese is more conservative but my salary was comparable to my Japanese counterpart, he made $2.00 less/hour.  Compared to China where I think $20 a day is on the higher end, the difference isn't all that great.

I wished we could get data on how much the 3DS is being markup by the retailers.  I wonder what the wholesale value really is for these larger retailers.

[Chozo Ghost]

Selling it at $250 would have been fine if the 3DS were made of $200 worth of hardware. That would have left Nintendo with $50 markup which is still more than reasonable. Its not that the $250 price is so bad per se, its more that Nintendo is selling it at a $150 markup. For the price we should be getting more powerful hardware.

[Ymeegod]

Sigh, glad you read any posts. ;0

The funny thing is I think I'm the only one that read what Isuppi actual does. 

[Ceric]

You know if Iwata is making 2.1 million dollars a year... Couldn't he opt for a better haircut and clothes that fit...

[nickmitch]

I don't think going on the price of the materials is all that fair in determining markup. R&D is expensive as ****, and next to Goodwill is one of the biggest accounts on any tech company's financial statements. Plus, moving products through the supply chain is highly expensive. So, while the parts may be only $100, getting the system to you probably costs Nintendo $230 a pop.

[Chozo Ghost]

Either the 3DS' price gets lowered or Nintendo's handheld marketshare will get lowered. Either way, something is going to get lower one way or another.

[Ceric]

You know I think a lot of this would be mitigated if the Game costs where universally dropped by $10.  The higher price of the system and the games make it a doubly whammy that leaves you sore.

[Mop it up]

Here's a fair point just because the raw materials add up to $100 doesn't mean Nintendo's overcharging.  There's tons of expenses that have to be factor in like labor, manufacturing, research, marketing, just to name a few.

It would be a fair point if Nintendo didn't admit that they raised the price of the 3DS due to the positive feedback at E3 2010. That's the main reason people say it is overpriced, because Nintendo have told us it is.

[Adrock]

Nintendo infamously admitted to marking the price up specifically because 3DS had such a positive reaction at last year's E3. Also, apparently Sony isn't selling Vita at a loss. So, if Vita sells at the same price as 3DS and since it utilizes more powerful hardware, it's a pretty safe bet that 3DS isn't worth anywhere near $250 when all is said and done. At the same time, Sony may be manufacturing Vita's chipsets themselves. I recall reading a while back that Sony bought a plant from Toshiba a while ago which was manufacturing PS3 chips so Sony could do the same for Vita. This would cut down cost but I'm not sure that closes the gap with 3DS significantly. That said, a $100 mark up is entirely within the realm of possibility. I'd bet on anywhere between$70 to $100 in pure profit for Nintendo, closer to the latter.

EDIT: Mop it up beat me to the 1st point. Damn you.

[Ceric]

Sony didn't really buy the plant as so much bought out the other partner by my understanding.

[SixthAngel]

I wonder how much Nintendo gives to retailers.  One huge advantage of actually having a profit margin is that you can give retailers a large enough cut so they want to promote your machine over the competition.  It wouldn't surprise me if Nintendo threw the retailers an extra couple of bucks to the get the Wii/3DS stuff displayed more prominently after getting relegated to the ghetto of the stores with the Gamecube.

[Ceric]

I wonder how much Nintendo gives to retailers.  One huge advantage of actually having a profit margin is that you can give retailers a large enough cut so they want to promote your machine over the competition.  It wouldn't surprise me if Nintendo threw the retailers an extra couple of bucks to the get the Wii/3DS stuff displayed more prominently after getting relegated to the ghetto of the stores with the Gamecube.

We know that Sony literally bought shelf space at GameStop to promote some different items.

[Ymeegod]

Sony is still selling at an loss with Vita:
In an interview with Reuters Japan, Sony’s Kaz Hirai stated that Sony aims to make a profit on the PlayStation Vita in three years. Sony often sells their hardware at a lost, so this isn’t anything new for the company as they sold the PlayStation at a lost despite the $600 price tag. Out of the three home-console manufacturers, Nintendo is usually the only company to make a profit on hardware right away due to their conservative nature of building their hardware.

-----------------------------------


 

[BlackNMild2k1]

There was that story, but then there was this one 11 days later
http://www.nintendoworldreport.com/forums/index.php?topic=30989.msg681996#msg681996

For Vita, the price on performance was something we definitely wanted to hit, although we all agreed because we are PlayStation, people expect better graphics and prettier pictures, so we have all those things we wanted to achieve in terms of capabilities, but we capped our ambitions with a cost of goods target that we can profitably sell the hardware for $250.

To answer your question, we set out a goal: Yes, we're going to hit the $250 price, and no, we don't want to sell the hardware with a deficit. That's a goal we set out to do and I'm very happy we are achieving that.

---------------------------------

[Chozo Ghost]

From the consumer's perspective, a $250 piece of hardware which the manufacturer sells at a loss seems much better than a $250 piece of hardware which the manufacturer sells for $100+ markup. You don't need to be a rocket surgeon to know which one gives you more bang for your buck.

[apdude]

Most companies I've worked for look for at least a 40% profit margin over the actuall build costs in order to cover all the other expenses that go into keeping a company afloat.  If the profit is 100, then on 250 it's exactly 40%.  No suprise there.

[Razorkid]

I could care less how much the thing cost to make or how much a company profits from it.  As long as I get the value for what I paid for, I'm happy.  Why do people care so much about these things? If something is too expensive for one person but affordable for another, that's fine.  If one person doesn't see the value in paying a certain price for a product but someone else does, that's okay too.
People pay $600 for an iPad.  I'm certain it doesn't cost that much to make, but does it matter? I wouldn't buy one for that price, many people have.  It doesn't mean they are wrong or right to do it, it just means their perceived value of the machine is worth paying that price.  Hell, my computer that I'm building for myself costs ~$2700.  That's absolutely bananas to some people, but to me it's worth every penny. I'm belaboring the point, but ultimately it's okay to think something is too expensive and there's no reason to try to prove why because in the end it's all subjective.


What do you all think of the way the 3DS' library is shaping up for it's first year on the market (including what's known to be coming out by holiday season)? To me, it takes a dump all over the DS' first year library as far as the number of solid titles available across multiple genres.  The only thing I feel the DS had more during it's first year is originality in it's software.  I have yet to see anything on 3DS that has made me say "Wow" to it's uniqueness software-wise. I hope the PSVita offers a lot more on the originality front during it's first year as well.

[leahsdad]

You know I think a lot of this would be mitigated if the Game costs where universally dropped by $10.

I think much more than the cost of hardware, the cost of games, from the perspective of the non-gaming public, is a big dealbreaker in the age of IOS and 99cent games.

Case in point:  today I took my kids to the pediatrician, and in the waiting room on a chair I found a DS cart that some kid left.  Now, don't get excited-- it was Cars the game based on the Pixar movie.  I turned it in to the receptionist.  The nurse saw me do this and she said "wow, I hope that kid gets that back.  Those things are expensive.  Really expensive."

[Ceric]

You know I think a lot of this would be mitigated if the Game costs where universally dropped by $10.

I think much more than the cost of hardware, the cost of games, from the perspective of the non-gaming public, is a big dealbreaker in the age of IOS and 99cent games.

Case in point:  today I took my kids to the pediatrician, and in the waiting room on a chair I found a DS cart that some kid left.  Now, don't get excited-- it was Cars the game based on the Pixar movie.  I turned it in to the receptionist.  The nurse saw me do this and she said "wow, I hope that kid gets that back.  Those things are expensive.  Really expensive."

I always love that debate with people.  They find out I game as a hobby and then go, isn't that expensive or too expensive something like that.  I then ask their hobby and their like Biking.  Which they just bought new bikes, annual gear replacements, travel to far offish places to ride, etc.  I'm just thinking of the cost of all that and I'm like yeah... I buy a game average once a month at $60 max... new system every 2 years or so...

As a hobby its pretty in line with what everyone else is doing but, their is a public perception of very expensive.

[GaMMa]

I do think the price is kind of on the high side until you stop and realize the price for a smartphone (without a contract) is anywhere from $500 to $750. At this point the 3DS can do everything my smartphone can do except placing calls. Do I think it's worth it? Yes.
 
Games are more expensive this generation, but there is the eShop. You can get Kirby for the GameBoy for $4. I'd personally rather play that than half the cell phone games out there.
 
I personally blame the price increase on the current financial crisis. If the yen/dollar/euro ratio was more stable I'm sure we'd see cheaper prices. I think a lot of Japanese companies got hit hard when the yen skyrocketed compared to the euro and the dollar.

[TJ Spyke]

I think a lot of Japanese companies got hit hard when the yen skyrocketed compared to the euro and the dollar.

Yep, I think Iwata himself said during a conference call that the rising value of the yen really hurt Nintendo since much of their revenue came from outside of Japan (and Iwata almost laughed when he answered an investor's question by saying they couldn't expect people outside of Japan to pay for their games in yen).

[gbuell]

I love reading threads like this where lots of people turn out to be wrong. (Not that I would have done any better if I'd made a prediction before today.)

[Ceric]

I love reading threads like this where lots of people turn out to be wrong. (Not that I would have done any better if I'd made a prediction before today.)

Part of that is there was not  a precedence for Nintendo to make this kind of move.

[gbuell]

Definitely understood, I don't blame anyone for not predicting this.

[Adrock]

Gamecube set the precedent, minus compensating early adopters. Well, close enough, about a month earlier and $30 extra off. I didn't think 3DS was in as bad a position as Gamecube but I'll take a price drop and free games.