Ok, this sounds quite fascinating!
I will be back later with my thoughts...
STATUS: pending...
OK, this stood out for me:
Numa: Even still, considering the system sold for 24,800 yen, I remember thinking it was an expensive piece of technology, even more so than the Famicom back then.
K: It’s worth pointing out that even at that price point, we weren’t making any profit on the hardware. Software royalties actually helped us lessen the blow. If we had tried to recoup our research and development for the hardware directly through the console, I bet you it would have come in at somewhere around 50,000, maybe even 70,000 yen.
This is crazy...I was tracing out the cost of PCE hardware and realized that NEC kept a premium price for many, many years...I wonder now if this was simply to recoup costs on hardware losses during first ______ years.
http://archives.tg-16.com/Gekkan_PC_Engine_1993_05.htm#coregrafx_ii_reduced_priceIf you read the blurb, you'll see that NEC held the price of CoreGrafx II steady for 2 years, despite SFC/MD competition. I also make the argument that the cheapest PCE (Shuttle) doesn't seem to be worth it (it can't upgrade to CD-ROM).
Considering that Nintendo has profited from hardware sales (historically), it means that the video game market was very difficult for newcomers like NEC to crack into (releasing a console is the "easy" part...creating a viable, long-term, profitable ecosystem is much, much harder).
I had always assumed that NEC was profiting soon after launch from PCE hardware sales (since selling hardware was NEC's forte, and business model, up until this point).
Crazy.
Also, the article mentions, but doesn't make this point clear enough: although NEC had been making a profit selling home electronics (TV, VCR, etc), their profit margins were slashed to nil once cheaper competitors gained massive market share. So, the only *unique* product left in their portfolio was the PCE.
SO NEC COMPLETELY STOPPED MAKING HOME ELECTRONICS (tv, vcrs, etc) in the late 80's and put focus on the PCE/TG-16.
Pretty crazy to "pivot" that way, but it was the right move for the times.
So, I apologize for using the trendy/hackneyed term "pivot"...