Manufacturing costs for the Nintendo Wii have dropped by 45 per cent since the system's launch in 2006, according to an analyst at Credit Suisse.
Analyst Koya Tabata made the suggestion in a recent note to clients adding that Nintendo had room to cut the price of the Wii to stimulate sales, reports the Financial Times.
Tabata further argued that low-price versions of the Wii could be released for emerging markets.
The PlayStation 3 outsold the Wii in Japan for the first time in 16 months during March 2009, with Sony's console shifting almost 147,000 units compared to just under 100,000 Wii units.
"It is still the first few months of the year when sales are slow for the industry, so we are not particularly concerned," commented Nintendo.
While sales of recent titles such as Wii Music have lacked lustre, Nintendo explained that it hopes "to line up strong software to support hardware sales in the second half of the year".