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Nintendo NX hardware will not sell at a loss

Nintendo NX hardware will not sell at a loss

May 2, 2016 | By Christian Nutt

"Next, about how we are looking at cost, we are not thinking of launching the hardware at a loss. When Wii U was launched, the yen was very strong. I am assuming that situation will not repeat itself. Selling at a loss at launch would not support the business, so we are keeping that mind in developing NX."

- Nintendo president Tatsumi Kimishima

The upcoming Nintendo NX system will not be sold at a loss.

The quote above comes from company president Tatsumi Kimishima, speaking at the company's latest investor meeting. 

While that might sound like an obvious move, it's not as simple as you'd expect. For one, new video game consoles -- from all manufacturers -- are often sold at a loss during their launch period. 

Case in point: The Wii U, Nintendo's current hardware, was. In an investor Q&A from 2014, late president Satoru Iwata refers to "the loss arising due to the hardware production costs being higher than our trade price."

This flies in the face of Nintendo's longtime hardware design philosophy, as credited to the late Gunpei Yokoi, most notably the hardware lead on the original Game Boy. He coined the phrase "lateral thinking with withered technology," which refers to using low-cost, mature tech in products, and the company has used this philosophy in many of its successful hardware devices.

Kimishima also refers to exchange rates. To use his words from the company's investor briefing: North America is "Nintendo's largest market." That means that exchange rates are of particular notability to its business. 

Exchange rate shifts allowed the company to swing back to profits in 2015; a strong yen caused the company's stock to slide in 2010. 

If the yen continues to hold at a rate favorable to Nintendo's business, that could result in a rosier launch for the NX than the Wii U saw, regardless of if it sells much better. Kimishima was cagey about divulging company expectations for NX sales at the investor meeting; the console is due to launch worldwide in March 2017.

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