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Analyst Estimates 3DS Raw Materials Cost Just Over $100
Analyst Estimates 3DS Raw Materials Cost Just Over $100
March 24, 2011 | By Kyle Orland

March 24, 2011 | By Kyle Orland
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An "preliminary estimate" of the cost for the raw hardware inside Nintendo's new 3DS portable values the guts of the system at just over $100.

An analyst from Gamasutra sister company UBM TechInsights tells Eurogamer that the components inside the system cost Nintendo $101 per unit, or $15 more than the Nintendo DSi.

The number would mean Nintendo generates a substantial profit from the sale of each 3DS, which retails in the U.S. for $250. Those profits would go towards recouping marketing and research and development costs, as well as general labor, packaging and distribution costs.

Last June, Nintendo president Satoru Iwata said he didn't expect to sell the 3DS below production costs. The Nintendo Wii was profitable when the system launched, according to Nintendo of America president Reggie Fils-Aime.

But many hardware makers initially sell systems at a loss in an effort to increase potential profits from software licensing fees.

A report from market intelligence firm iSuppli estimated Microsoft didn't start generating profits on Xbox 360 hardware sales until roughly a year after the system's late 2005 launch.

Sony, on the other hand, was estimated by iSuppli to be taking a $300 loss on each PS3 at launch, despite the system's initial $500 to $600 retail price. The firm said the redesigned "slim" PS3 hardware was "rapidly approaching profitability" by the end of 2009.


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Comments


Fábio Bernardon
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That is why I will wait until it reaches the price of the current DS: $130~150. I don't think it is worth more than that and I will not pay more than that.



I guess they decided for this high price to avoid people selling it out on e-bay if it is a big success, but we will see in a couple days if it will be the big success they predicted or not (since I know I am not the only people refraining from buying it now).



As for myself, I will continue to use my DSL for a while.

Benjamin Leggett
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They sell hardware above cost because they can. And that's probably part of the business strategy that's kept them afloat these past several decades.

Leon T
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We still don't have a clue what the profit from the device will be from this news. The cost of the raw materails is one thing. What does it cost to build. How much R&D was put into the device? What is the cost of making the OS and built in games for the system?

Prash Nelson-Smythe
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Exactly. You also need to store, transport and assemble those raw materials. And retailers take a cut etc. etc.

Javier San Juan
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Finally someone that knows a little bit about business. Thank you!

A W
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Despite what we don't know, what we do know about Nintendo is they have yet to make hardware the don't profit from right out of the gate. So even if the make $20 per $250 unit sold, they still make that much.

A W
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"But many hardware makers initially sell systems at a loss in an effort to increase potential profits from software licensing fees."



Of the many I know of only 2. Microsoft and Sony.



As for the price of the 3DS. I think Nintendo learned something form the Wii, and that's how the gray market was able to take profitable advantage of the Wii Shortage. I think they they want to better prioritize their profits this time around.



Now if I can just find my Affiliate link to Amazon-dot-com. I would like to interest you in the purchase of a 3DS its games and accessories.

Malcolm Miskel
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I do believe Sega did it, too; so that would be pretty much every major hardware player aside from Nintendo.

Arnaud Clermonté
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I suspect Nintendo used to sell their consoles at a loss too,

back in the days where their consoles' hardware specs were competitive.

William DiSanto
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Yeah, as mentioned above "raw materials" are not the only factor here. Some facts about bringing electronics into production that you should consider:



- Companies like Nintendo buy components in BULK, ie. tens of millions per order, so they are getting super deals on expensive chips and screen. A chip, like the accelerometer, or gyro (not sure which is being used) in the 3Ds will cost you and me anywhere from $4 - 10 for a decent accurate digital one. They might get each accelerometer for around $1 - 2.



- They build printed circuit boards by the millions. This means each board might cost under $50. However we would have to pay around $200 for an individual board plus all the assembly.



- Nintendo has to dump tens of millions in the R&D as well as the test and verification departments. This funding propels activities like:

. Designing the PCB, the schematic to interconnect the components

. designing the wireless interface, antenna design, hardware level stuff like impedance matching,

noise filtering, and amplification

. camera calibration and placement

. design of the case of the 3DS, made child safe and durable, lightweight, this would cost a

hobbyist more than the electrical design in some circumstances

. Managing the power through the system, battery and recharger (all custom designed)

. Working with Sharp to implement view dependent 3D screen

. Finding the best cost/accuracy/speed ratio parts from the most reliable vendors

. Organizing secondary and tertiary vendors in case of production failure

. Planning the lifespan of the device as certain components are no longer produced, or are produced in diminished quantities

. building multiple prototypes

. testing EVERYTHING, shake tests, temperature, drop test, low power test, high noise ie.

EMF interfearence, test all the wireless functions IN A SPECIAL CHAMBER

http://en.wikipedia.org/wiki/Anechoic_chamber $$$$$$$$$$$$$$$$$$

. performing dummy production runs, hundreds of units made and not sold, just to verify the large scale production

. and much much more ...



- On top of all that, in production some units will fail and have to be discarded or picked apart for good components



- Marketing, packaging logistics, etc. (a whole different ball game)



- Legal, patents, copyright, protection from lawsuits (legitimate or not)



- ALL THE SOFTWARE ON THE SYSTEM



- creating documentation for in house and third party game developers

William DiSanto
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Here's some info if you want to build some of your own hardware, game systems, little computers, controllers etc. Its totally feasible, it will just take up to a year or more to accomplish.





(Open source GB)

http://antipastohw.blogspot.com/2008/10/using-inputshield-to-make
-open-source.html



(schematics + PCB) free to a certain extent

http://www.diptrace.com/

http://www.sunstone.com/pcb123.aspx

http://www.cadsoftusa.com/



(micro-controllers)

http://www.microchip.com/

http://www.arm.com/products/processors/index.php





(physical sensors)

http://www.invensense.com/ (gyros and accel on same chip)

http://www51.honeywell.com/aero/common/documents/myaerospacecatal
og-documents/Missiles-Munitions/HMC6352.pdf (compass, military aerospace quality)

http://www.analog.com/en/index.html (AD a very beastly company, about as beast as Honeywell)



(wireless)

http://www.sparkfun.com/categories/112

http://www.sparkfun.com/categories/115

http://www.microchip.com/stellent/idcplg?IdcService=SS_GET_PAGE&nodeId=2664¶m=en53576 1



(screens)

http://www.sparkfun.com/categories/147



(part vendor)

http://www.digikey.com/ (great selection of general parts)

http://www.sparkfun.com/ (good for beginners great place to learn)



- not too familiar with buttons and controls, sry.





- Maybe I should start a gaming hardware blog ... hmmm.

Aiden Eades
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Some of that stuff is pretty interesting. Wonder if I could create my own version of the move controller :P

A W
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Wow maybe you should... Very good info.

Aiden Eades
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Nothing to do with the 3ds news here just the ps3 news... BAH



Hated americans complaining that they were paying $600 for the console, especially when in the UK we were paying £600 (at the exchange at the time almost double. current exchange $960) even if they were losing money on sales in the US they were clearly breaking even / small profit in the UK and other european territories.



And its the same with the 3DS, they're making about $100 more on the UK sales than the US... I hate being English. Sorry thats the bitterness over for now... I hope



As for the actual 3ds launch, i'm still a sceptic. Primarily because I still haven't seen a display console anywhere, and when it comes to 3d I refuse to believe it until i've seen it. Since most of what i've seen is rubbish.



I know i'll buy it eventually though... I'll probably fly to the US to buy it, it'll be cheaper that way... damn bitterness.

William DiSanto
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Yeah for some reason prices are significantly higher in Europe. Perhaps they have not secured production facilities in the Eastern Europe or west Asia. A lot of large electronics companies have opened up shop in those areas to drive prices lower in the region. It's also a source of extremely cheep labor that seems to fly under the radar in North America. Nintendo might not have the financial flexibility to create their own production plants there, but I'm not completely sure.

Luis Guimaraes
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What about R$799,99 ($481,92) for the 3DS preorder...


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