There’s been a bit of speculation about the Switch 2’s price. It’s far higher than Nintendo consoles have been for around two decades, and a lot of consumers may be right to complain that they’re being priced out. But why did Nintendo go this route? We may have finally gained insight around this.
Shortly after the Switch 2 Direct, Toyo Securities’ Hideki Yasuda shared his belief that the Switch 2 is already a loss leader. Toyo’s estimate was that the console’s ‘bill of materials’ was around $ 400. Subsequently, Nintendo Prime shared a rumor from retailer Double Jump Games that the Switch 2 was only making $ 4 per unit. In other words, Double Jump Games’ retailer data indicated that Nintendo wasn’t making a profit on the console at all.
MST Financial analyst David Gibson spoke to Financial Times, who made a stunning claim. He stated that the Vietnam export data for the Switch 2 unit price is $ 338. This is the figure that Nintendo’s partners provide to Vietnam and other countries for the purpose of determining custom duties.
By necessity, the retail price of any product would have to be higher than the cost of manufacturing. And no, this is even before companies decide on a profit margin. The price has to factor in shipping costs, which include not only the cost of dealing with shipping and transport companies, but the different tariffs and duties in each state.
While Gibson’s claim is lower than Toyo Securities’ estimate, the gap isn’t that big. It’s clear that the Switch 2 takes significantly more to make, down to the costs of the console’s more powerful components. It seems incredibly unreasonable to expect that Nintendo would have sold the console at $ 400, as there’s a huge chance that that price would not have been enough to even just cover shipping and transportation costs.
Ultimately, this is a situation where Nintendo made a decision that they knew would not please everyone. In between keeping their prices low and making a more powerful console, they went with the latter. And there could have been an alternate Switch 2, that would have probably been called a Switch Pro, with less powerful hardware than what’s in the Switch 2 now. It would have been designed to stay below the $ 400 mark, and would likely have not been powerful enough to run games like Cyberpunk 2077.
But we’re in a new era of Nintendo, where it seems the most important visible factor isn’t president Shuntaro Furukawa, but their hardware partner, Nvidia. We’ll find out in time how much Nvidia can push their hardware to make Nintendo and their customers happy (and along the way, show something to Sony and Microsoft who went with AMD).
