"They are making Millions in profits off of their hardware and games. "
Flagging GameCube hobbles Nintendo profits
http://www.gamespot.com/news/6140455.html
"Though Microsoft loses money on each of its current- and next-generation
consoles, its rival Nintendo makes a point of profiting from its hardware.
So when sales of the GameCube suffer, so does the company's bottom line, as
shown in Nintendo's latest six-month annual report.
For the six months ending September 30, 2005, the company saw net income of
36.6 billion yen ($308 million), a 21-percent slump compared to the same
period in 2004. While net sales fell just 6.2 percent to 176.3 billion yen
($1.4 billion), operating income plummeted 51 percent, going from 40
billion yen ($336 million) to just 19.6 billion yen ($165 million). "
"Nintendo said its net profit for the six months ended Sept. 30 fell to
36.6 billion yen from 46.45 billion yen a year earlier."
Not sure what you're trying to prove here. A ~20% decrease in profit is
still profit (and over $300 million of it over six months), so you pretty
much proved his point that they are making millions in profits off of their
hardware and games.