No value-added 3DS models planned for now
Don’t count on a waterproof 3DS or a system with a high quality sound anytime soon. Nintendo president Satoru Iwata has said that the company has no plans to introduce value-added models in the near future.
Iwata told investors recently that introducing too many 3DS models could make consumers unsure about which product they should purchase. He compared the situation to cell phones, of which there are “too many options”. Iwata wouldn’t rule anything out for the long-term future, however.
Nintendo only introduced the 3DS XL due to requests for a larger screen. Iwata noted that the DSi XL was well-received when it was released.
I understood your question as whether or not we plan to launch more value-added models to improve profitability of the hardware. First, the issue is if consumers would accept a rise in production costs that match added value of the product because adding value leads to production costs going up. In consideration of the Nintendo business model, if we introduce more and more types of game hardware devices, consumers may have trouble choosing which device in a store is best suited to them. For example, what is happening today is there are too many options of cell phone devices for people to choose from. Curiously enough, we, as human beings, feel happy to have incremental options to some extent, but when the number of options surpasses a certain level, we fall into a situation where we have trouble identifying just one that we should select. Since we have to also consider such an aspect, we don’t have any concrete plans to develop another value-added model at this point. Looking at a longer range of the future, we won’t deny the possibility, though. Another point I should mention is: Nintendo produces one model of a product in much larger quantities than the companies in other industries can possibly do. As a result, considering the components included in our products, we have been able to contain the total production costs. In recent years, Japanese companies doing business in the U.S. and Europe are facing the significant issues with the yen’s appreciation. In the age when one U.S. dollar was equivalent to 120 yen, the sale of a product for 200 U.S. dollars generated 24,000 yen in sales, but it is around 80 yen per one U.S. dollar now, so the sale of the same product yields only 16,000 yen in sales. The Japanese export industry is struggling with that difficulty today. We have been making efforts to decrease the impact of the yen’s appreciation by doing all kinds of things like changing the payments of production costs from Japanese yen to U.S. dollars (for the payment of procurement of components and labor costs). But we can’t do the same for the payment of costs denominated in Japanese yen, to be specific, the payment of parts made in Japan, costs to develop products in Japan and so forth. On the other hand, no matter how strong the yen becomes, consumers in the U.S. have nothing to do with the fluctuation of foreign currency exchange, which means, for them, 100 dollars is 100 dollars, and 200 dollars is 200 dollars. Therefore, we can’t raise the price of our product (because the yen is appreciating). Accordingly, it is important to reduce production costs by the volume efficiency of mass production. As such, we can’t afford to deploy so many model variations in our business. Under such a circumstance, we had a great deal of requests from consumers that they wanted larger screens on the Nintendo 3DS. Also, when we introduced a larger screen version of the Nintendo DSi in the past, it was very much appreciated by consumers, and the Nintendo DS market expanded. This is why we decided to introduce a new variation model of the Nintendo 3DS for this time.
