Selling hardware at a loss is a trend only recently explored by Nintendo with its 3DS handheld console, which, at launch, hit the market with too great of a cost, limiting sales. The firm subsequently dropped the price to below cost, witnessing a moderate improvement in sales.
The 3DS hardware is already back in-profit as Nintendo has managed to cut production overheads and so we have no doubt that the firm is kicking itself for not keeping the cost low at launch, when introduction of the new device had some serious momentum and PR behind it.
Not to be caught making the same mistake twice, Nintendo revealed at an investor briefing that the firm would globally be selling the Wii U below cost, having chosen price-points that it believes will appeal to the consumer, rather than determining a price based around manufacturing cost.
This practise is fairly common in the console industry, with high-end consoles selling at a significant loss when first launched, in an attempt to establish a larger consumer base, with games the primary income source. Nintendo, with its affordable hardware, has rarely had sell below cost to appeal to consumers.
This either means that the Wii U is believed by the firm to offer a great experience for its £250 price-point or, that the hardware itself is surprisingly costly to manufacture. Release is only one month away, November 30th, and so we'll have our answer soon enough. Either way, given recent Nintendo losses, the firm really needs to rally consumers behind the Wii U.
