Topic: Nintendo management policy briefing

[Aussiedude]

Very interresting read, 4 pages.

Quote
When will Nintendo announce the exact price and launch date of Wii? Is your policy that you sell Wii hardware at or over the cost?

Iwata:  I believe we will need to announce the precise price and launch date of Wii in or before September this year. Because we are saying that we will launch Wii in the fourth quarter of 2006, or during the October-December time period, we will need to make these announcements before then. So, we are contemplating to make these announcements in or before September. Let me now talk about your question on whether or not we will sell Wii hardware below cost. Some take it for granted nowadays that video game hardware is sold below cost, at least initially, but I don't think it should be regarded as common sense. Of course, if manufacturing costs are expected to be reduced so small red ink in the beginning will be soon offset as a whole hardware-software business, it is one idea. However, some people somehow think that hardware always loses money. Nintendo is taking some distance away from that approach. If you ask me, "Will Wii be sold at or over the cost?", I cannot tell today if we won't lose even one yen by selling one Wii hardware. However, we do not intend to lose a great deal of money from the hardware sales. Any loss must be recovered elsewhere, of course. We are making our overall Wii plan so that we can develop it as a healthy business from the first year.

Link

[wandering]

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Iwata
I was referring to this kind of unhealthy product cycle The real value of the software must be judged with its contents, not with the medium on which the software is stored. Our business has been based upon the fact that we are asking consumers to appreciate the value of the contents, not the material cost of the optical discs, which are much cheaper.

I actually don't really have a problem with this philosophy (especially now that new Nintendo games will be cheaper than new games on the other systems.) Most entertainment doesn't drop dramatically in price so soon after launch.

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Miyamoto
Having said that, however, I am a very cost-conscious person, as you know by now. I have never spent money for non-prospective activities such as for building a movie studio.

Oh?

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Iwata
we have been wondering if it is the right approach to consistently use them just to compete against each gamer for 5 or 10 years. This is how we came to propose WiiConnect24, which will use the Internet for people to enjoy sharing information. I am yet to know what kind of revolutionary entertainment can be created with WiiConnect24, but we will not stop challenging these unprecedented things.

Good, good.

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Miyamoto
Finally, I am doing something lately, but I think I need to refrain from talking about it today. Hopefully, I can tell you what it is in 6 months or so.

So there's still an original Miyamoto IP in the works? Good.

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Iwata
Reggie has been working for Nintendo for three years. We wanted him to be the face of NOA who speaks English as mother tongue. We also wanted him to dispatch and explain Nintendo's global strategy to people who are working at NOA. We believe that the appointment of Reggie as NOA president will accelerate the understanding of Nintendo's strategy inside the Nintendo group.

We do not want Reggie making any decisions whatsover.

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Iwata
there is a thing Wii can do better than DS. When a player is enjoying playing DS, it is hard for other people to know what the player is actually doing. When DS hardware is held horizontally like a book, it may tell the player is doing Brain Age, but that is about it. When a player is playing some other game, others cannot even see which software is being played on the screens. Wii is far more obvious.

This is why I think the Wii will actually be more popular than the DS...

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Iwata
If Wii Sports is the only such title we can sell on Wii's launch date, it will be difficult for good news to spread by word of mouth. In fact, we are intending to launch multiple such titles on or shortly after the Wii launch date. It may be sold as packaged software, or it may be downloaded as Virtual Console software.

Good...

[King of Twitch]

So a little over $1700USD for a dev kit. Interesting stuff.

"...Wii will be a failure if it cannot sell far more than GameCube did. In fact, we shouldn't continue this business if our only target is to outsell GameCube."

I hope he doesn't mean this and he's said it before, because as far as I know each Nintendo system since the SNES has sold less than the one before it.

[Aussiedude]

Quote
Originally posted by: MJRx9000
So a little over $1700USD for a dev kit. Interesting stuff.

"...Wii will be a failure if it cannot sell far more than GameCube did. In fact, we shouldn't continue this business if our only target is to outsell GameCube."

I hope he doesn't mean this and he's said it before, because as far as I know each Nintendo system since the SNES has sold less than the one before it.

What Iwata means  is there is no point to release the Wii if there only target is to sell about the same as the GCN. Since Iwata  has taken control Nintendo has changed, all of his answers made sence.  

[Ceric]

It was insightful in it's own way but you notice how they skillfully dodged questions?  Well oiled machine there.

[SixthAngel]

I always wondered why it was legal for companies to sell consoles for a loss.  I understand how companies like Sony then try to make money on software but isn't this a textbook example of large companies having the ability to lose money simply to push smaller companies out and keep other companies from entering the market?

[Ian Sane]

"I hope he doesn't mean this and he's said it before, because as far as I know each Nintendo system since the SNES has sold less than the one before it."

And that consistently shrinking market share is a problem and eventually down the road would inevitably make Nintendo's console market unprofitable.  That's just simple logic.  If you sell less each time eventually you will reach a point where you no longer make money.  So it's good Nintendo acknowledges this and considers it a problem that needs to be fixed.  We should be all happy as market share is what benefits us gamers over anything else.

[couchmonkey]

The way things are going, I'm confident Nintendo is going to earn back a lot of lost market share this generation.  It's still a bit too early to say just how good third party support is, we keep hearing great rumours, but only time will tell how that pans out.  It's also too early to tell if the non-gamer approach will work very well.

In spite of those things, there's so much interest in the system from the hardcore community, I suspect it will easily outsell GameCube, and probably more or less match N64 sales, at worst.  It could conceivably take off and outsell any console previously released if Nintendo actually captures the non-gamer crowd.  Even without non-gamers, Nintendo could still take first place if there's enough third party support and enough games that make it more fun to play than a traditional system.

Unfortunately, squeezing out competition by underselling them is nothing new, and I don't think it's illegal or anything either.  Just nasty.  In fact, one of the companies that formed IBM decades ago was the National Cash Register Company.  They were known for undercutting competition to force them out of business, and then making a profit by charging high prices for maintenance on the cash registers.  Some of the tactics they used may have been illegal, but overall I don't think it's something you can do much about.  It would likely cost more to fight this type of business on the legal battlefield than it's worth.

[BlackNMild2k1]

Well there is a law about dumping, but I think that has more to do with charging one price over here and then dumping harware for alot cheaper somewhere else just to increase userbase. As long as they are charging about the same price everywhere I don't think taking a loss is illegal.

[KDR_11k]

As I understand it dumping is only illegal if you have been convicted of being a de-facto monopoly in a market and as such are seen as attempting to monopolise other markets. I guess the only reason the DoJ isn't slapping MS over the XBox is because MS managed to bribe the govt enough.