A labeled mock-up of the new model shows where everything goes. [credit: Nintendo ]
The recently announced “OLED Model” of the Nintendo Switch will retail for $50 more than the $300 standard model when the upgrade goes on sale on October 1. But the new model is estimated to cost Nintendo only about $10 more to create, increasing the particular company’s profit margins on typically the high end of its still-hot gaming hardware.
That cost estimate comes from Bloomberg News’ Takashi Mochizuki , who breaks down the approximated production cost increase like this:
- 7-inch Samsung OLED screen: $3 to $5 more per unit (according in order to Yoshio Tamura, co-founder of industry research firm DSCC )
- 32GB of additional internal storage: $3. 50 per unit (according to Omdia ’s Akira Minamikawa)
- New dock w/ LAN port and other improvements: “a few dollars more” per unit
Loss leaders and profit centers
Historically, many console makers have sold their hardware at price or at a loss in order to attract a bigger audience of potential customers for software (and the console-maker licensing fees that come with it). But while Nintendo initially sold the Wii U at a loss , it has made a profit on every Switch hardware sale since its launch , with estimates at the time suggesting that the $300 system cost about $260 to produce (per unit) within 2017 .