alt Hacker NewsThe higher margin is mostly coming from assembly costs, right? I can't imagine it comes from the actual cost of the battery being so much higher. I hope that once they start pushing these out and retool factories for them they can sell them more broadly.
The lower margin for the new variant you mean?
From my experience, it comes from costs generated by:
1. Additional R&D-work and QA for the modification
2. New supply-chain deals for lower-volume components
Current sales-volume of Europe is only a quarter of the global volume, so price-negotiation is based on a much lower total volume-forecast.
Even if not, Battery prices today are ~15% higher than in 2024 (I expect Nintendo signed the supply-deal in late 2024), it'll be hard for Nintendo to cancel their existing supply-contract before fulfilling it (!), move to a different component AND get the same/lower price.
--> Better to sell other regions as-is, fulfill the contract and hope for a better climate in a year.
3. Tooling/Assembly (Ramp-Up costs, different processes, QA,...)
4. Re-certification of HW for relevant bodies in that region (Europe is quite lean on this, CE-certification is simple compared to US FTC/FCC)
I can almost hear the conversation with Nintendo of America CEO about covering 1/3 of the cost to get the same SKU and him simply responding "No, we just raised the prices because of component-cost increase, we wait for the HW-refresh in 2H/2027"
I wouldn't be surprised if they plan to unify the SKU again with a premium "Switch 2 OLED", offsetting the additional costs, preserving the margin and having an additional selling-point...