This week the world’s media was abuzz with the rumour that the price of Nintendo’s upcoming Wii U console was leaked.
Website “ForgetTheBox” posted a story on their site claiming that a “source close to manufacturing and distribution” contacted them with explicit details about the Wii U’s direct cost to Nintendo for all parts.
The total cost, according to the anonymous source, came in at $180 (currency wasn’t provided), meaning (apparently) that Nintendo will sell the console at $300 (again, no currency was provided). But how does this rumour stand up to our BS-o-Meter? Let’s check it out.
We’re getting a little sick of calling out “anonymous sources” – because every damned rumour that starts these days is from someone who’s too gutless or non-existant to come out and say things like where they work, or who they are. But I’m sure there’s more holes in this one than just that.
Like the minute details. Anyone who claims they are journalists would be dubious about the lack of currency stipulation in the sources claims. Nintendo are a Japanese company, so they deal mostly in Yen. However, Wii U is said to be manufactured in Taiwan; they use the “New Taiwan Dollar”, or NT$. We might assume that the prices were in US Dollar, however the “Forget the Box” website is based in Canada, though these exchange rates are pretty close. Either way, it seems suspicious that this wasn’t stipulated.
But that’s not the only cost related hole in this rumour. The biggest one is the alleged price of the Wii U’s “Near Field Communication” (NFC) chip. NFC allows two devices to instantly swap data – like your credit card’s “PayPass” function. Basically, there are two types of NFC available; contact type means the devices must physically touch each other, whereas contact-less means the device just has to be within range. For the record, Nintendo said they will be using the contact-less type.
Anyway, according to the rumour, the NCF chip in the Wii U is costing Nintendo a whopping $5 per unit! Here’s what the website said;
The new NFC capabilities for each new Wii U controller costs no more than $5 to implement, and the prices of NFC implementation in mobile devices is expected to fall below $1 in the near future. Our source explained: “NFC capabilities are a drop in the bucket for Nintendo. As NFC becomes more mainstream in mobile devices, the price for NFC implementation will rapidly decline. Nintendo is jumping on NFC because of a projected cost decline in the technology.
This is pretty much the smoking gun here; this sources information was gleamed from this whitepaper on NFC chips on a NFC forum. The kicker? It was written in 2007. Here’s what the whitepaper says about NFC chips in general;
The additional cost of including a stand-alone NFC chipset on the typical electronic
device motherboard can be US$5+ per unit, and requires 25–30 connector pins.
Implementing the same NFC functionality as a custom IP block on a Bluetooth chipset
typically adds under US$1.00 per unit, requires only 6–8 connector pins (including test
pins) and, obviously, needs no separate chip. The NFC IP block can be placed in the
corner of the Bluetooth chipset using on-chip connections.
Of course, we don’t know that this source found this whitepaper, but if you type “NFC chip cost” into Google, it pops up pretty highly, and does mention both $5 and $1. But if he had seen this paper, he read it wrong. Basically, it says that building in a chip by itself can cost over US$5 per unit, but you can integrate it into the bluetooth chip for as little as US$1 per unit. This is what we’re assuming Nintendo is doing, because the current Wii controller does use bluetooth technology, so it’s safe to assume the new Wii U controller will too.
Now it’s safe to assume that NFC has come down in price since 2007 anyway (and that paper was the only thing we could really find that mentions a $5 asking price for NFC). Those in the know are forecasting a 30% global penetration of NFC by 2015, so it must be cheap enough to include into any old toy, phone, TV, etc.
Also, the source seems to know everything about the Wii U’s manufacturing and distribution, but has no idea how much the CPU and GPU will cost. Other than to say that “Nintendo is keeping costs low”. Well, no, Nintendo aren’t keeping costs low at all. They aren’t handpicking cheap parts to save profit, especially when it comes to CPU’s.
A report from In-Stat (who study these types of things) found that AMD are charging a pretty hefty US$40 per die. This report came out in 2005, so we can maybe assume that price has come down a little, maybe even halved when you consider the amount of devices being made these days. In fact, just last year AMD announced they were revising their costing structure and bringing prices down.
Of course, this isn’t telling us anything about the Wii U’s price, but it is showing that even with a minimal amount of effort, anyone can find an estimated cost of components using Google.
But despite not providing the writer with an actual breakdown in prices, this source has come to the conclusion that Nintendo will charge “no less than $300”. Wow. Thanks for that – that’s pretty much what everyone’s been expecting for 12 months now.
If this guy knew anything about any part of the Wii U manufacturing, he wouldn’t just say “The NFC chip costs $5, therefore the console will be at least $300”. Surely he would be enticed or willing to give details about the console’s much-speculated-upon GPU, or shed some light on Nintendo’s wireless process for transmitting low-latency images from the console to both the TV and the controller; something Apple struggles with it’s iPad’s “AirPlay” feature.
The source also claims he is “close to manufacturing and distribution”. This is ridiculous because it could simply mean he works as a truck driver at Foxconn. He’s certainly not close to distribution on Nintendo’s side, since he’d have to be Satoru Iwata himself to be able to claim he specialises in both areas. But the source’s final word makes him out to sound like a lunatic;
“Nintendo chose an economical GPU and CPU that could keep up with the performance of today’s current consoles, but keep hardware costs down to maximize profits. Nintendo got a bargain price on the custom GPU and CPU that the Wii U uses. There is a bigger focus on downloadable content, applications, video content, digital distribution, and services to create a stream of revenue. Investors will be ecstatic with the news.”
Nintendo chose a low cost processor, then they got a special bargain price on it! Is that trying to make us believe that the processor is crap? And if so, how are Nintendo planning on offering all that new content they’re apparently focusing on?
There’s just too many questions to take this one seriously; if the CPU and GPU are so cheap, what exactly is Nintendo using? If the manufacturing comes to $180, why is Nintendo considering a $300+ price tag? How do you know? What other components are in Wii U that make up the $180 cost? After all, you only mentioned the touchscreen ($14), the NFC chip ($5), the cameras ($6) – that only comes to $25. What about plastic? Cost of assembly? Warehousing and logistics? CPU and GPU? RAM? Storage? Other components? Packaging? Compliance? You didn’t even mention the Wii U’s microphone and speakers – what type of speakers are they using? The disc slot must be custom, what price does that come to?
The bottom line is that of course you can expect to pay more than US$300 for the Wii U when it comes out. Xbox 360 cost US$399 when it hit the market, and it did very well indeed. Sure, it’s cheaper now, but Wii U is totally brand new. But we don’t need some anonymous source telling some random Canadian website that nobody’s ever heard of before to give us that expectation.
There was no source. No leak. Just a fairly decent guess based on a good 30 minute Google search. Until anyone can prove otherwise, this should be your final verdict. I encourage discussion in the comments below.