When someone says "the average employee" at an investment bank made 600K last year, or brought in 1.25M in profits, keep in mind the old joke about how, when Bill Gates walks into a bar, the average guy in that bar becomes a multimillionaire.
Every trader, salesperson, and banker has dozens of people working to support his or her work with paying clients. The support staff, which includes operations and IT, generates absolutely no revenue at all. (With possible exceptions for the small handful of people who write automated trading and risk systems.) Correspondingly, the support staff is not paid anywhere nearly as well as people who work in "producing" divisions. Notice that no one talks about the median employee, which would be a much more interesting metric.
Nintendo are nuts. The guys at Nintendo in charge of a project I worked on never seemed to stop working, despite their night time falling into our time zone's work hours. It's pretty sad to hear that for their extended 7-day work week they're getting $90k on average.
it's not really crazy in East Asia (China, Japan, South Korea). it's more or less the norm. sacrifice everything for big corporation X and yet not expect a sizable reward within a relatively short time frame (well at least by Western standards)
I take it no one has heard of Samsung's dormitories? For the 1st 2 years of employment there as an engineer, you have to live in the company dorm with your team (sharing a room with a bunk bed with 1 team member). o yeah they also get to regulate when you can leave company grounds (like for going out on a date). it's a very dif world there...
Key takeaway: "Nintendo is able to make so much money with so few people because it relies on outsourcing."
I met a fellow who once employed over 30 people for his building construction company. Then he became one person, with the rest outsourced. Maybe he is doing better than Nintendo if one measures success as the article does.
Yes, and here's another great example of outsourcing: Vizio, the flat panel TV manufacturer had revenues of $1.9b with only 85 employees. That's $22.4m/employee in revenues. I don't know what their profit margin is though. (http://www.inc.com/inc5000/2008/company-profile.html?id=2008...)
Outsourcing is a perfect illustration of the revenue/profit per employee analysis. If a particular function your company is doing is low-value-added (i.e it can be done by companies with lower revenue per employee than yours), you should consider outsourcing that function.
Employees are the most valuable resource of most companies, and efficiently utilizing this valuable resource is the most important function of management. Managerial complexity is a super-linear function of headcount, and complexity kills productivity.
Actually, it would explain very well why Nintendo would never get into, say, DVD players, HDTVs and such.
And Nintendo's per-capita profitability also explains why Microsoft is so desperate to break into video games, except that they just haven't been able to replicate the magic so far.
MS has done pretty damn well in gaming. They've been 2nd now in 2 straight generations, and their XBox Live Arcade (which has near 100% markup) is supposedly raking in millions each day. Everyone was expecting another 3DO, and instead they dethroned PlayStation.
Their performance might not seem as impressive as it is because they have other multi-billion dollar products, but the Xbox has been a gangbuster success for Microsoft.
Look at it this way. If you think Microsoft knew, when they started their foray into the video gaming world, that they'd be exactly where they are today that they still would have done it?
My guess it they're REALLY happy with the way it worked out.
The reason maybe is that Nintendo focuses on ONE market and do a reasonable job in delivering what people want: good games. Goldman has different units in different markets all trying to make money: investment banking, securities, research groups, etc.
This is in part due to the unexpected roaring success of the Wii. Such a feat will be difficult to pull off in the future (although Nintendo is remarkably left-field thinking and might surprise us).
So before the Wii and DS, I bet that the profit-per-employee was probably less than that of a Goldman employee.
I would be really interested in a 10 or 20 year profit-per-employee comparison between Goldman and Nintendo.
you're right. even when Nintendo was a dismal 3rd in the last console war with Gamecube, they were still making very healthy profits with the console. still dominating the handheld market helps too.
Before Wii, I could wrong, but I think they had about 3 billion in cash reserves.
I think it has more to do with projected revenue growth. The big factor in stock price isn't profit, it's growth. During the past two years Nintendo's profits doubled year over year. As a result their price rocketed to ~$80/share. Now that their growth has started to stabilize, the premium paid for that growth has disappeared.
When someone says "the average employee" at an investment bank made 600K last year, or brought in 1.25M in profits, keep in mind the old joke about how, when Bill Gates walks into a bar, the average guy in that bar becomes a multimillionaire.
Every trader, salesperson, and banker has dozens of people working to support his or her work with paying clients. The support staff, which includes operations and IT, generates absolutely no revenue at all. (With possible exceptions for the small handful of people who write automated trading and risk systems.) Correspondingly, the support staff is not paid anywhere nearly as well as people who work in "producing" divisions. Notice that no one talks about the median employee, which would be a much more interesting metric.