The Wii Value Proposition

I think when people talk about the value of a console and look only to the hardware comparision between the Wii and the gamecube they are missing a lot first of all the Wii itself may be based on the the gamecube chipset but it also includes bluetooh, a sensor, full backwards compatability with the gamecube with controller ports and memory card reader and emulation of other consoles, an SD card reader, wireless controller, acts as a wireless hub, flash memory increased specs based on the flipper and gekko, USB ports, composite cables, and a slot loading drive capable of accepting 2 disk types. This also doesn’t take into account the R&D cost for the development of the Wii. The size of the Wii suggests that a lot of time and engineering wen’t into shinking the tech and getting it all to fit into such a small space. Also include the software located with the Wii such as the Channel system which gives access to boards, Mii avatar channel which allows you to customize your avatar, Wii Weather, Wii News, Wii picture edito/viewer and slideshow creater as well as the Virtual Console which will offer retro games at the start with thirty at the beginning and approx. 10 to be added per month and new gaming material as well. It will have Opera which I seperated due to the cost of the browser and possible cost of the browser. (although I think they may still be in negotiations with Oprea since no price was released for it) This also doesn’t take into account that Nintendo will not be charging to access many of the channels like Weather, News or the Boards. The fact that channels can be added at any time by Nintendo and don’t need to be downloaded because of Connect24 should also be considered in the value proposition of the system and its always on function that will allow the system to update itself at any time. Wii channel interface offers so much more flexibility and uses something as natural as channels for the mainstream market. While not at all high tech the interface is slick with that clean look with channels that are useful everday like news and weather or work with the hardware like the photo editor and viewer. It will also have a quick on type function that will allow no waiting for use while it doesn’t seem like much it is definitely nice.

That is only the console itself and doesn’t take into consideration the R&D of the Wii remote and the nun chuck. The remote contains IR, accelerometer, rumble, speaker, bluetooh, is wireless, an expansion slot, a small amount of memory for your customized avatar from Mii and comes with batteries all developed to function without lag and has lots of buttons and some lights on it shrank to fit in a very small space and can detect movement in 3D. Like with the console it must of taken a lot of time to shrink it down which has to be expensive. Then there is the nun chuck which contains accelerometers and anolog as well.

When you take it all together I can see it as a whole being worth that price. There is a lot of added value in the console itself and while not everyone will want it they are options that I think are more useful in the real world. I really think that the channel system and accessing it with a remote *I know what a SHOCKINGLY obvious thing but not to a gamer* to make it accessable to the casual and non gamer and does so in a way that I think that other set top boxes failed at. There is also a lot of untapped value that will come over time as the Wii gets established this is not apart of the immediate value but more like a promise for the future such asDS connectivity which could allow the Wii to act as a download point increasing the value propsition if you already have a DS, online gaming with no membership cost(Xbox Gold) and I think that the value proposition is very good I wish it was lower as well but that doesn’t make sense from a business standpoint. I also think like some of the other manufacturers there will be additional perhiperals this would not be included in the value propostion since they are not a part of the system to begin with but are important to take note off like a wireless headset once online gaming is launched.

You can’t raise your price after you bring a product to market because the consumer will not bear it but you can always lower your price and this is what they did because what something is worth is what the market is willing to pay and the early adoptor will certainly pay for it and once they do Nintendo can lower the price and catch even more of the mainstream which will benefit because by then it will have established itself in the market and Nintendo will have launched some of its other services which will take the form of channels like Wii Online, DS Connectivity channel and have more killer apps like Smash, Mario and Metroid.

Look everyone will think that I am a fanboy but I think that all of the consoles have their own unique mix in their value proposition and I hope they all do well. I think that Nintendo’s approach is superior to that of the PS3 and Xbox 360 for attracting the mainstream but poor for a hardcore gamer. I am also sure that Nintendo is developing software for casual gamers like Big Brain Academy and the Channels that people who are not gamers can use. With the module type OS and using the photo editor as an example you can see the direction with applications that Nintendo is exploring. The photo editor and viewer makes perfect sense given the nature of the storage medium since SD cards are mostly used with cameras. All these things togther create a clear idenity for the direction of the Wii in the mainstream that I don’t think can be copied easily. The unique interface, slick design *with that damn blue light* and marketing message is clear and I think that the next gen war would be boring if Nintendo wasn’t there to mix it up. They are creating a real differentiation with their product and changing the entire company with these strategies. This will be an epic battle between PS3 and the Xbox 360 with the Wii being a dark unpredictable horse. Once they get manufacturing running at full tilt in a few months which will cause the cost of components to drop and when sales start to slow get ready for the price drop and new colours and then see the insanity begin. Nintendo is in a great position because they can lower their prices at a much faster rate than either the PS3 or Xbox 360 can while still remaining profitable and this only increases as time goes on. Since it was desinged to be efficient from the start the cost will drop due to volume which is harder for the Xbox 360 or the PS3. So Nintendo can dictate price at any point and I can’t wait to see what crazy things they have in store for us with those channels. I can’t wait for the day that you turn on your Wii and instead of seeing 5 or 6 channels you see a new one now that is just cool.