Report: Nintendo Switch OLED Model Only Costs $10 More To Make
Nintendo expects its profit margins to improve with the newer and more expensive Nintendo Switch OLED model.
Nintendo surprised fans with a Switch revision announcement this month, one that adds an OLED screen and several other improvements to the existing hardware. The Nintendo Switch (OLED Model) is likely to be a profitable device for the company, as the technology used to create a Switch has gotten cheaper in the years since the console was first launched. According to a Bloomberg report, the new updates are estimated to add around $10 more to the manufacturing cost of each unit.
This particular model of the Switch will cost more than its regular counterpart, $350 as opposed to the standard price of $300. It's not an unusual move for mid-life consoles to charge consumers more instead of less but compared to the significant upgrades that the PS4 Pro and Xbox One X introduced to the market when they launched, Nintendo's OLED model Switch strategy seems peculiar for a device that offers little else besides an upgraded screen, storage, new console stand, and LAN port.
"Nintendo failed to provide enough added value to justify a $50 bump in the new hardware," Morningstar's head of equity research Kazunori Ito said to Bloomberg. "The new hardware is barely half-baked and would do no help at all in sustaining the platform's momentum. The Switch had its peak last year and is only going to slow down from here."
Other experts disagree with Ito's opinion, citing the improved display and popularity of Nintendo's brand is more than good enough to "squeeze $50 more out of consumers" as the console stays on track to reach the 100 million lifetime sales milestone in its current fiscal year.
"Nintendo made a real bold decision because it's obvious that people would spend more on services and less on goods going forward," Sony Financial Holdings senior economist Takayuki Miyajima said. "From a macroeconomic viewpoint, the move couldn't be made if they have even a slight concern on how well the console would do."
Wedbush Securities analyst Michael Pachter also believes the $350 price tag is justified, as he recently explained that Nintendo wouldn't charge that amount unless it firmly believed in how well the device will sell in a market where most people prefer to use their Switch as a handheld gaming device. As for the rumored Switch Pro, Nintendo has confirmed that it's constantly developing new hardware, so a more powerful console could eventually be released.
The new Switch console launches this October, and if you're curious about upgrading, you can check out our feature on what the difference is between the Nintendo Switch OLED and Nintendo Switch Lite. Switch OLED preorders begin today, July 15.