Nintendo says it won’t cut the price of the Wii. Apparently that’s a surprise to some people, because it bucks “tradition” which holds that all game machines have price cuts within a year or so of their release.
But it’s not a surprise to us – especially not after the company announced that it was ramping up production of the Wii by a third to meet overwhelming demand. Bear in mind that the Wii is already very cheap, particularly compared to its rivals: At $250, it’s $30 less than the cheapest version of Microsoft’s Xbox 360 (MSFT) and $150 less than the cheapest version of Sony’s PS3 (SNE). That was Nintendo’s strategy from the get-go: Produce an affordable machine with less horsepower than its rivals, and target a much broader audience.
That’s worked remarkably well: The company just posted a record profit, up 60% y/y. So why change now?