Report: Nintendo Makes About $49 Per Wii Sold in U.S.
An analyst in Japan has estimated the profit that each Wii sold generates in Japan, the U.S. and Europe. With currency conversions factored in, the Wii makes the most money in Europe ($74 each), followed by the U.S. ($49) and Japan ($13).
Nintendo President Satoru Iwata promised from the very beginning that the Wii console would generate a profit on day one. While Nintendo has not disclosed exactly how much it costs them to make the Wii console, a new report in the Financial Times cites Nikko Citigroup analyst Soichiro Fukuda who estimates that Nintendo's gross profit per console is 1,500 yen in Japan, 5,600 yen in the U.S. and 8,500 yen in Europe. That equates to about $13, $49 and $74, respectively.
Fukuda says that Nintendo is able to make more money on the console in the U.S. and Europe because of a slightly higher retail price and the bundling of the Wii Sports software. While the Wii is a profitable endeavor for Nintendo, the company's rivals Microsoft and Sony have yet to make money on their new platforms. Microsoft is aiming to make a profit in its Xbox division in 2008, while Sony likely won't profit on the PS3 until the following year.
In the meantime, the Wii has surged, reportedly taking the #1 position worldwide with 9 million units sold. And following comments by Nintendo of America President Reggie Fils-Aime that Nintendo would have "unprecedented" supply this holiday season in North America, analysts in Tokyo expressed similar sentiments that the company would have little trouble ramping up production. "Nintendo's strategy has always been to have more than one supplier for the same part so there are no shortages," said one analyst in Tokyo. "This way, Nintendo always gets the best price and production is not an issue."
The Times article itself actually focuses not so much on Nintendo's supply and profit, but the profit of its component makers. The Wii has no doubt been a great boon to many of the parts makers involved. For example, Mitsumi Electric, which provides the Wii's wireless LAN module and parts for its controllers, helps assemble the machine and also supplies parts for the very popular DS, can attribute an estimated 40 percent of its profit to Nintendo, analysts said.
Additionally, Tabuchi Electric, which produces the AC adaptor for the Wii, reported a 492 percent increase in operating profit during its first quarter, and Hosiden, a parts maker in Osaka that helps assemble the Wii, saw sales rise 84 percent and operating profit rise 70 percent.
