Its a well documented fact that game console designers take a loss, sometimes substantial, whenever they launch a new product. Sony expects to lose somewhere in the neighborhood of 100 billion Yen ($884 million) with the launch of the PS3. Console makers depend on software sales to balance out these heavy losses and give the company a profit over the lifespan of their product. Nintendo doesn't seem to think this will be the case with Wii, however.
President Satoru Iwata told a news conference, "We can't promise we won't have even a one-yen loss, but we are not expecting an enormous loss. It is a strange notion that a game console always leads to mounting losses in the beginning. We are working to make the Wii business a healthy one from the first year."
Iwata also said that if Nintendo just meets their expected production numbers of 6 million Wiis by March of next year and 17 million in software sales, they will be looking at a very limited earnings impact for the current business year.
Nintendo is going head to head with the Sony PS3 and the already established Microsoft Xbox 360 in a $30 billion video game market. Sony and Microsoft both boast next generation graphics and powerful units (with powerful price tags), while Nintendo only claims fun for gamers. Coming in at under $250 around November 17th, Nintendo looks to have prime position on making the other two stand up and notice.
Source:
Reuters
Written by: Dave Horvath @ 7 Jun 2006 5:51
