Hideki Yasuda of Toyo Securities has once again chimed in on the Nintendo Switch 2, one week after the official Switch 2 Direct.
Yasuda has been visibly in public sharing his predictions and opinions around the Switch 2 in recent weeks. He previously claimed that Nintendo had massively stocked up with secret mass manufacturing of the console, to the tune of 6 to 8 million units.
While we don’t know how many units Nintendo has made of the Switch 2, Nintendo of America president Doug Bowser seems to have corroborated his claims. In a recent interview, Bowser stated that Nintendo did have some time to build inventory. He also made it clear that they built up that inventory of Switch 2 units to avoid shortages, thereby keeping scalpers and resellers at bay.
As reported by GoNintendo, Hideki Yasuda has shared a new speculation about the Switch 2, which carries a lot of weight if it is true. In Yasuda’s words:
“We believe the Switch 2’s bill of materials is around $400, meaning Nintendo would still be selling consoles at a loss in the US with the 10% tariff — but the loss would be something Nintendo would be able to absorb.”
If Yasuda’s speculation is accurate, than it truly reflects an end of an era for Nintendo, at least in terms of their business philosophy. Under Satoru Iwata, and before him, the heir of Nintendo’s founding family, Hiroshi Yamauchi, Nintendo has gone out of their way not to sell consoles at a loss.
This may seem incredible, but this was true all the way back in the early 1980s, when Yamauchi ordered Masayuki Uemura to produce a cheap game console that could play arcade quality video games on game cartridges.
That console, the Family Computer, would be the most advanced video game console upon its release, definitively demonstrating its technical prowess compared to the Atari 2600, Magnavox Odyssey 2, Sega SG-1000, and others. But because of Yamauchi’s mandate, Nintendo didn’t really spend that much to make their industry leading games console.
This design philosophy held true through the decades, even for lesser selling Nintendo consoles like the Nintendo 64 and GameCube. As some gamers will remember, the Wii U and possibly the 3DS after the price cut were the first such products Nintendo sold at a loss. The argument could be made that the Virtual Boy could also be added into this category, but it was made in so few quantities and was in the market for so short a time that its impact was mitigated.
Even when Yamauchi was alive, he did see that it would eventually no longer be feasible to make consoles in such a way that they were sold at a profit. Sony and Microsoft certainly demonstrated that the loss leader strategy could be far more successful, but the risk-reward tradeoff was also much higher.
When Nintendo signed with Nvidia for the original Switch, the custom SOC Nvidia supplied was already a bit older and sold for cheap to Nintendo. This was how Nintendo managed to make a profit on that console. But the advanced hardware in the Switch 2 may have raised Nvidia’s asking price to the point that it was no longer possible.
So it may be that Nvidia is ultimately the reason that Nintendo is ending their philosophy to sell consoles at a profit. But then again, seeing what technologies Nvidia has added to the console, and the very impressive results, maybe it’s all worth it. This wager will be decided when gamers finally vote on it, with their wallets of course.
