Nintendo’s “OLED Model” Switch estimated to cost just $10 more to produce

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 produce, increasing the company’s profit margins on the high end of its still-hot gaming hardware.

That cost estimate comes from Bloomberg News’ Takashi Mochizuki, who breaks down the estimated production cost increase like this:

7-inch Samsung OLED screen: $3 to $5 more per unit (according 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 cost 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) in 2017.

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