For the most part, Nintendo has consistently sold its consoles at a profit right from the start, with a couple of exceptions. We've known for a while now that the Nintendo Switch is also being sold at a profit, but until now, we haven't been sure exactly how much money it costs to build one. Thanks to a new report from Japanese firm Fomalhaut, we now know that the manufacturing cost for the Nintendo Switch is roughly $257, meaning Nintendo makes about $40 for every Switch sold, disregarding other costs.
Published on the Japanese website Nikkei Technology, Fomalhaut's report on the Nintendo Switch's manufacturing cost also speculates about the console's potential success. Fomalhaut's report is even more optimistic about the Nintendo Switch than others, claiming that the console will sell 30 million units by 2018. Other analysts have predicted that the Switch will sell 40 million units by 2020, a number it should be able to beat if it does indeed reach 30 million units sold by 2018 as Fomalhaut believes.
With Nintendo already making money on each Nintendo Switch console sold, if the device does manage to reach those numbers, it should be considered a major success for the Big N. After the Wii U sales failure and the brief period that Nintendo sold the 3DS at a loss, the company needed a win in the hardware space, and it seems as though the Switch is delivering on that front so far.
As the years go by, the Switch will become even cheaper to produce for Nintendo, which means its profits on each console sold should increase. Of course, that could be offset by a potential price drop, which Nintendo might implement to keep the console competitive with other systems like the upcoming Project Scorpio, for instance. However, with Switch selling out the world over, it doesn't seem as though Nintendo will need to implement a price drop for the system any time soon.
In the meantime, if Nintendo wants to maintain its momentum with the Switch and keep its sales up, it will need to make sure that the console's library continues to add high quality software. Part of the Switch's success has to be attributed to The Legend of Zelda: Breath of the Wild, which broke the record for more perfect scores than any other video game created to date. As long as Nintendo keeps releasing games of that caliber, the Switch should have no problem meeting sales expectations.
Nintendo Switch is available now.
Source: Nikkei Technology