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Nintendo Businesses The Almighty Buck Wii

Wii Shortages Costing Nintendo 'A Billion' In Sales 290

Posted by Zonk from the less-than-a-hojillion-but-still-frustrating dept.
A New York Times article from this past Friday highlights the 'problem' that Nintendo is facing: more people want to give them money than they can handle. Analysts quoted in the story discussing Nintendo's unique Wii shortage problem indicate that the company could be selling twice the 1.8 million consoles a month it ships. All told, these same individuals believe the company could be leaving as much as $1 billion on the table this holiday season. "'We don't feel like we've made any mistakes,' said George Harrison, senior vice president for marketing at Nintendo of America. He said there was a shortage because the company must plan its production schedule five months ahead, and projecting future demand is difficult. He added that there had been a worldwide shortage of disk drives that had hurt Nintendo as well as makers of many other devices. 'It's a good problem to have,' Mr. Harrison said of the demand, but he acknowledged that there could be a downside. 'We do worry about not satisfying consumers and that they will drift to a competitor's system.'"
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Wii Shortages Costing Nintendo 'A Billion' In Sales More

Wii Shortages Costing Nintendo 'A Billion' In Sales

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  • Let's use the music argument... (Score:5, Insightful)

    by Gothic_Walrus ( 692125 ) on Monday December 17, 2007 @12:15PM (#21726638) Journal
    When people try to justify downloading music, they say it's okay because they wouldn't have bought the album in the first place, which means that no money was lost in the process.

    Wouldn't the same kind of logic hold here? How can Nintendo lose money on nonexistent consoles if they're already at full production?

    • Re:Let's use the music argument... (Score:5, Interesting)

      by CastrTroy ( 595695 ) on Monday December 17, 2007 @12:19PM (#21726704)
      If people decide to buy something else instead, and never end up buying a Wii, then it is money lost. However, I think that a high percentage of people will just end up buying it later, once units become available. Also, if the buy it later, the cost to produce a Wii might have come down, and Nintendo may end up making more profit per unit. That could yield them even more money in the end.

      • Food for thought (Score:4, Interesting)

        by dj245 ( 732906 ) on Monday December 17, 2007 @01:03PM (#21727444) Homepage
        These are all good points, but I think the extra time that people spend waiting for the wii will be spend evaluating the other options, looking at the games, deciding if it is worth it and if the cross platform games perform the same or better on other consoles. While it is true that the wii has titles and gameplay the other consoles do not, cross platform game support for the wii is downright awful. Plus while it comes with wireless internet support out of the box, practically no game uses it for multiplayer play.

        When it comes down to it, for me the choice was pretty clear. Since I don't like Metroid that much and I've already completed Twilight Princess on wii, I could have a $300 mario machine with shitty 3rd party games or pay the same amount and get a PS2 with a pile of accessories and games. Is it fair to compare the mature PS2 library to the wii's? Not entirely, but the Gamecube's at end of life wasn't anything like the PS2's is now either. I don't have high hopes for seeing a wide variety of good games on the wii, aside from Nintendo published games

        • Re: (Score:3, Insightful)

          by callistra.moonshadow ( 956717 )
          One thing to keep in mind is that some of the market for the Wii is the seniors. They are probably more willing to wait to get one than teens or twenty somethings. Another group are those with young children. I have a 3 year old and a 7 year old. When considering other consoles because of the Wii shortage, it became clear the other consoles would not suffice. The Wii is so young-kid friendly that we decided that if we couldn't get one for XMAS we'd wait until we could. I think that part the demographi

        • Re:Food for thought (Score:5, Insightful)

          by Turken ( 139591 ) on Monday December 17, 2007 @02:33PM (#21728906)

          When it comes down to it, for me the choice was pretty clear.


          And this is why your entire argument falls flat. You're a gamer, and you assume that everyone else looking for a Wii views it the same way that you do. Hardcore gamers have already made up their mind about whether they want a Wii and bought one if they wanted it. Now, the vast majority of people looking to buy a Wii are either new gamers, or parents of new gamers. These are people who have no clue what "cross-platform gameplay" means and if they wanted to buy a PS2 then they would have done so long ago, since the PS2 has been a mature and available system for years.

          The real driving force behind Wii is not that it is a "must-have-one-too" Christmas toy, but rather that the Wii is a social system. People play with their friends and/or family members' system, and decide that it is fun enough that they want one of their own. I may only have anecdotal evidence of the Wii's "viral" appeal, but I have seen it happen so many times I'm thinking about keeping a tally on the side of my Wii to record the number of friends and family who have gone and bought their own after playing with mine.

          Sure, there will be some people who don't buy a Wii after Christmas due to budget constraints, but the vast majority will simply wait and sustain the demand well into next year. However, they won't spend that waiting time "evaluating other options," because for these customers, there is no other option.

          • Re: (Score:3, Insightful)

            by Steve525 ( 236741 )
            However, they won't spend that waiting time "evaluating other options," because for these customers, there is no other option.

            For these non-gamers, other options are HDTV's, furniture, jewelry, or just about anything. I agree with you that these people are unlikely to evaluate other gaming systems. However, they still may loose their enthusiasm for the Wii, and spend the money someplace else. Sure, they might wait and buy a Wii when they are easier to find. Or, something else could catch their interest,

    • Re: (Score:2, Interesting)

      by Limb ( 1047158 )
      Because people want yo buy the wii, but can not find one. They WANT to give nintendo their money, there's just no wii's for them to get in exchange for the money. Using your example it'd be the same as someone going to the store to buy an album, only to find out that there is no more copies of the CD left, so instead they buy another bands album. It is money lost because people want to buy the product, but can not so instead they buy a competitors product instead.
      • There's plenty of Wii's in mainland Europe though. They could maybe redirect some to the US/UK to help satisfy demand? I got one before Christmas last year anyway so I dont mind, hehe.

      • Re: (Score:3, Informative)

        by Sancho ( 17056 )
        Right, but I can say the same thing as Nintendo.

        Because I don't have 1000 Wiis, I'm losing money by not being able to sell them on eBay.

        Does that help explain the flawed premise? It's money I never had. I have lost nothing, I'm just not achieving equilibrium on the supply/demand curve.

        Nintendo's loss is solely in opportunity. It is not money which they once had, and now do not.
    • "Wouldn't the same kind of logic hold here?"

      No.

      "How can Nintendo lose money on nonexistent consoles if they're already at full production?"

      They're not filling a billion dollars worth of demand.

    • no one's getting any (Score:4, Insightful)

      by Scrameustache ( 459504 ) on Monday December 17, 2007 @12:57PM (#21727358) Homepage Journal

      When people try to justify downloading music, they say it's okay because they wouldn't have bought the album in the first place, which means that no money was lost in the process.

      Wouldn't the same kind of logic hold here? How can Nintendo lose money on nonexistent consoles if they're already at full production?
      No, because no one is downloading magical Wiis and they WOULD give Nintendo that money if they could.
    • Because time is the forth dimension in economics. Getting $250 right now is different than getting $250 next year. Not only does inflation make it worth slightly less next year but you have to consider what you can do with that money over the period of a year. Even the crappiest 5% interest gets $12.50 and that's just $250. Multiply that out... a few million here, a few million there and pretty soon your talking about some real money.

      There's millions of examples. How much does a house really cost through a

  • Curious (Score:5, Interesting)

    by Infinite Wave ( 1124173 ) on Monday December 17, 2007 @12:17PM (#21726676)
    I just don't understand how they could not have for seen this shortage. I mean last year the same thing happened and they said then they would be ready for this year. Yet here we are. I have friends, family and co-workers asking me where they can get thier hands on a Wii. It really makes me wonder about the rumors of intentional shorting. From a business point it would make no sense to short your sales. From a marketing point however it's been brilliant. Wii is all the rage and is likely so popular BECAUSE it's hard to get. Nothing lights a fire under middle American purchasing power like that hard to get must have Christmas gift.

    • Re: (Score:2, Interesting)

      by Luminus ( 34868 )
      "[the wii] is likely so popular BECAUSE it's hard to get."

      This sounds true in theory, but is not true in practice. The majority of children don't realize that it's a hard to find item - they just know their parents tell them Santa might bring one, and he might not. Certainly they are aware that it's not readily available in the stores, but thinking back to my own childhood, there wasn't a single item (that I _remember_ at least) I wanted badly because it was hard to find. Supply and demand wasn't a

      • Re: (Score:2, Troll)

        by Neoprofin ( 871029 )
        I must live in the oddity spot of America.

        I had a large number of friends who were pretty excited about the Wii, I know four who got them, all within the first couple months of the systems release. A couple got it fairly easily, one spent every weekend calling stores until she could find one but even that didn't take more than a month.

        I also know one who still uses it. The supply of worthwhile games between Metroid and Supersmash Brawl has been such a desolate wasteland that they've all moved on. Yes
        • I'm kind of in the same spot. I got a Wii at launch and as far as I can tell, people aren't having trouble getting it. I suggested to my health care professional that she buy one for her family, and at the next week's visit, she told me she got it, no problem.

          Since, like you, I'm getting kind of bored with it despite having gotten a lot of games, I'd gladly sell it if I could get $500 for it, but i just don't think could pull it off.

        • Re: (Score:2)

          by Maul ( 83993 )
          What worthwhile exclusive titles have appeared on the XBox 360, or PS3, over the past year? Halo 3 for the Xbox 360 is the only one I can think of. The PS3 has nothing worth mentioning. At least Nintendo has their first party titles, because lately, 3rd. party titles on all systems have been pretty lackluster.
    • I remember reading somewhere about what Nintendo had to say about the shortage. It went something along the lines that knew it was coming but to prevent it they would have to open up a new factory. If the shortage is only for this holiday the cost of opening a new factory would not out weigh the money they would make. Also the factory would only be able to open after the holidays. So they went with taking the conservative road on it by not opening a new and hoping for the best. At the moment they are at ful

      • You can see that because if you REALLY need one you can get it, after going through the normal holiday hell. You will have to either camp out on expected ship days, get a bundle, or neurotically check web sites. I have a friend who just got one by going the web site route.

        Here in Finland, I could get one just by walking to the nearest store and forking over 260 euros, if I had that much :(.

    • Re:Curious (Score:5, Informative)

      by Fozzyuw ( 950608 ) on Monday December 17, 2007 @12:35PM (#21726968)

      I just don't understand how they could not have for seen this shortage.

      They saw the shortage and they knew it was going to happen. The people running Nintendo's financial and business planning know what they're doing and probably have spreadsheets of predicted outcomes.

      The problem is reaching the best profit margin. (Reminding of an old computer game in High School business class) Nintendo could build spend money on 100 new factories and pump out 100 million Wii's in one month to satisfy demand. But what happens when the month is over? Nintendo is left with 100 factories with 1000's of works sitting around picking their noses. Effectively, they'd start hemorrhaging money in keeping said factories with the only recourse to sell the factories.

      Otherwise, they're now pumping out millions of of systems a month that no one is buying, because demand was just satisfied in one orgasmic explosion. All those systems are being pushed into storage, which costs money. Now, we look at something like the PS3 and all the design/model changes it had. If a design/model change happened to the Wii, it'd have to firesale it's entire stock to make way for the new stuff.

      It's a balancing act and Nintendo has the benefit of pop-culture status with the Wii. The "OMG, there's a Wii on the Shelf" shock (thanks to customer experience and news media hype) practically guarantees an impulse purchase, if for no other reason to tell their friends they finally found a Wii (even if they just got a 360/PS3 as a gift).

      Also, Nintendo increased output (that started 5 months ago) to *help* meet holiday demand but as there is with super popular things, there can only be a reasonable amount of product produced. Demand can come in spikes (holidays), but production simply cannot be spiked like that. It takes time to make a product, but takes an instant to create demand. And unlike the 360 or PS3, the Wii hasn't had time to stock up units for the holiday rush as it's been more-or-less sold out since it launched.

      Cheers,
      Fozzy

      • Re:Curious (Score:4, Interesting)

        by bleh-of-the-huns ( 17740 ) on Monday December 17, 2007 @12:55PM (#21727312)
        You hit the nail on the head there with the shelf shock statement. I had been going into local electronics stores whenever I happened by them, for about six months, asking if they had wii's in stock, of course the answer had been a solid no for 6 months, till the day someone said yes.. and I was confused for a min about what to do. Naturally I bought the wii.

        The problem I came across, is that even though I played it for the first week or 2 (this was about 6 months ago too), after that it lost its playing appeal when I was home alone and with the wife (who hates it because the controller is not exact enough and she cannot play with it without getting pissed off). These days, I only play it in party conditions and when we have friends over for dinner. Its a great social game console, but beyond that I find it no fun to play. Unlike my old xbox (non 360), which I can sit and play alone all the time.
      • The assertion that Nintendo would build an entire factory to satisfy the console demand is ludicrous. They would and should simply hire a contract manufacturer like a Foxconn or Solectron or Sanmina and get the product out. If quality issues are that important, they can put their own support in-factory to ensure that their standards are met. It's done on a regular basis in the electronics industry.

        What you also don't take into account in your analysis is how pent-up demand means lost dollars on licensing
      • Nintendo could build spend money on 100 new factories and pump out 100 million Wii's in one month to satisfy demand. But what happens when the month is over? Nintendo is left with 100 factories with 1000's of works sitting around picking their noses.

        I wouldn't expect Nintendo to double the size of their production force to deal with the current demand. But I do wonder why they didn't start planning at this time last year to raise production capacity by 10% or so -- a relatively low-risk increase which prob

      • Reminding of an old computer game in High School business class

        The Lemonade Stand game? or Drug Wars? both were fun. :)

        I like my Wii, though it is fundamentally different from MSFT or Sony so the target audience is different. I don't get blown away by killer graphics, I've never gotten into online gaming, and I don't spend that much time gaming in general. I think a lot of people are like me... and this group doesn't care if they get it now or later.

        Furthermore, the killer single player games are out (Metroid, Zelda, Mario Galaxy, Mario Paper, Resident Evil,

      • They could have solved this entire issue by making consoles that aren't region locked. There are dozens of Wii consoles sitting at my local game shop here in Japan, and there's no big Christmas rush here. Since you're probably making the consoles in China or Malaysia and have to ship them anyway, and if there is a surplus in Japan, you'd say, why doesn't Nintendo just ship the extra units from Japan to the U.S.? Well they can't, because they've factory-locked the console to only play discs from Japan. S

    • Re: (Score:3, Informative)

      by pushing-robot ( 1037830 )
      Yes, but tons of people also thought that the Wii was a fad and demand would drop off in the middle of 2007. Factories are damn expensive, and Nintendo didn't want to sink billions into a manufacturing blitz only to have production lines sit idle when the "novelty wore off". They've still dramatically increased production, but they've done so at a more cautious rate.

      The Wii is in uncharted waters: More than a year after its release, it's still selling twice as fast as any console in history. It's silly
    • There were rumours that Microsoft did the same thing with the XBox 360 when it first came out. Seems like it didn't work out all that well for them, as their system has been out for twice as long, and has less units sold.

    • Re:Curious (Score:5, Insightful)

      by MobileTatsu-NJG ( 946591 ) on Monday December 17, 2007 @12:46PM (#21727162)
      "I just don't understand how they could not have for seen this shortage."

      In the space of a year, Nintendo sold 14 million consoles. That's more than the 360 sold in 2 years. Historically, consoles don't hit 10 mill in a year.

      "It really makes me wonder about the rumors of intentional shorting."

      The Wii was a surprise hit. The surprise wasn't that it's a hit, but that it was such a massive hit. Even the biggest Nintendo fanboy wouldn't have expected nearly this many sales the first year. The Playstation didn't even manage that and Nintendo's last couple of consoles didn't even come close.

      • I think you nailed it. Everyone is looking for a conspiracy when the facts are simply that the unit is THE most successful, ever. You can't "plan" that.

        Hell, even retirement homes are buying Wii systems as fast as they can get them. I don't think the PS3 or 360 will see that kinda demographic broadening.

    • Re: (Score:2)

      by xero314 ( 722674 )
      When Nintendo said they would be ready for it, what they meant was they would be ready to profit. what is happening is that Nintendo isn't hardly shipping any units, just enough to make it appear that the product is available in stores. Instead they are setting up hundreds of Ebay accounts and selling the hardware directly to the customers through auction. This allows them to charge the same price as Sony and MS with it appearing like they have the cheaper console, while making 4 times the profit they wo
    • It really makes me wonder about the rumors of intentional shorting. From a business point it would make no sense to short your sales. From a marketing point however it's been brilliant. Wii is all the rage and is likely so popular BECAUSE it's hard to get. Nothing lights a fire under middle American purchasing power like that hard to get must have Christmas gift.

      I don't think the shortage is perpetuating itself... it's only a byproduct of mass market appeal.

      This game console appeals to people outside the no
    • I just don't understand how they could not have for seen this shortage.

      They grossly underestimaed sales. Analyst forecasts were way short as well, so it's not like they were alone in that. They introduced a significantly different product marketed to a much wider demographic than the industry addressed previously. I would have been surprised if their projections were correct since it was essentially just an educated guess.

      And while it was good for sales and installed base that they didn't suffer the typi

    • I just don't understand how they could not have for seen this shortage. I mean last year the same thing happened and they said then they would be ready for this year.

      The issue is the Wii is selling better than any console in history. The Wii is selling faster than the PS2, the DS, or anything else that came before it. So Nintendo forcasted based on "Aggressive sales" and started with production of 1 million for launch, and 1 million a month, which they felt was a fair target (even optimistic, considerin

  • Aftershocks (Score:5, Insightful)

    by Fozzyuw ( 950608 ) on Monday December 17, 2007 @12:21PM (#21726744)

    All told, these same individuals believe the company could be leaving as much as $1 billion on the table this holiday season.

    The question I have is, ok it's $1 billion this holiday season but what about the after affects of the holiday? How many people who are dying to get the Wii (but can't) will still go and buy it in Jan., Feb., Mar.? My guess? A lot. Considering they've been doing it since Nov. 2006.

    It reminds of the pirated music idea. A person who pirates music(or movies) isn't necessarly going to be buying said music(or movies). Thus, one cannot say that pirating is a 1:1 effect on sales. Likewise, you cannot say that people who cannot buy a Wii as a gift for the holidays will not buy one after the holidays. Theoretically, if the Big N satisfied demand in December, they would then loose all those Q1 2008 sales. So, what's the point? The real question is, if those who want a Wii, but bought a 360/PS3, will still buy a Wii in the future?

    Cheers,
    Fozzy

    • There's definitely no 1:1 ratio but the lost sales are real. I'm not even talking about people buying a 360/PS3 instead.

      If I'm planning on spending $X00.00 for my kids for Christmas and I had hoped to spend it on the Wii and Wii related products, then if it's sold out, I MIGHT give my kids an IOU for the wii and give it to them next month...but the remaining money I would have spent on extra controllers and games will now be spent on something else because I can't bear to give them temporarily useless pr
    • Exactly. They've been going since November 2006 without anybody being able to find one anywhere. If they can keep that momentum up for a year, why not until March, April, or even next Christmas. The only point at which any of this will be hurting Nintendo is when they aren't able to see every single unit within days of it hitting store shelves.

    • Re: (Score:2)

      by Skapare ( 16644 )

      My younger nephew wants a Wii. But he said he'd take something else instead. He's too young (8) to be in much of a financial position to buy these things on his own. So I must decide if I get him some other game console, or cash.

    • Re: (Score:2)

      by gatzke ( 2977 )

      Last January my wife found out that the local Target was getting some Wiis. She sent me out at 5:00 AM to wait in the parking lot.

      6:00 nobody.

      7:00 nobody.

      8:00 nobody.

      A handful of people showed up about half an hour before opening. We all got a Wii, no elbowing.

      I did not have whiny kid to satisfy before Christmas, so January worked for me.

      I love my Wii. I have help sell a number of other families on them. I should get a cut...

  • If a $Billion is being left on the table, where are people spending it on? 360? PS3? Or how about this new fangled , environmentally friendly device called:

    GO OUTSIDE AND PLAY!

    Includes such games as Real World TENNIS (indoor and outdoor versions available)
    Real World BOWLING (available at a bowling alley near you).

    Both games come with a bonus titled called, GETTING FRESH AIR.

    *please do not frame me if the Wii is you only source of activity b/c of age/disability/religion/sex/creed/political stance.

    • Re:What are people buying instead? (Score:5, Funny)

      by plague3106 ( 71849 ) on Monday December 17, 2007 @12:29PM (#21726868)
      I'm spending it on mercury, then dumping it in the local lake. On the way home, I run over squirrels and cute bunnies.

      • Re: (Score:2)

        by Sciros ( 986030 )
        Dude you can do that with unmanned vehicles nowadays from the comfort of your own home. I really don't understand why going outside or driving around is at all necessary for this, and frankly I recommend avoiding it because if you mistake a moose for a bunny you'll at least be ok yourself.
      • At least you're doing all that in the FRESH AIR.

    • Re:What are people buying instead? (Score:5, Funny)

      by Chris Burke ( 6130 ) on Monday December 17, 2007 @12:40PM (#21727070) Homepage
      Includes such games as Real World TENNIS (indoor and outdoor versions available)

      I'm not sure where you are, but up here in the Northern Hemisphere it's winter when Christmas time comes. Even as far south as Texas playing outdoor sports is not something most people, even athletic, think is a good idea.

      As far as indoor, while it may be a helpful, I don't know many kids who are going to think "fitness club membership" is an awesome gift.

      bowling alley... FRESH AIR.

      You know in my word association, "fresh air" makes me think "bowling alley" just before I think "corner dive bar".

    • Re:What are people buying instead? (Score:5, Funny)

      by MobileTatsu-NJG ( 946591 ) on Monday December 17, 2007 @01:00PM (#21727392)

      If a $Billion is being left on the table, where are people spending it on? 360? PS3? Or how about this new fangled , environmentally friendly device called:

      GO OUTSIDE AND PLAY!
      I hear ya, man. I wish I could impose my views on everybody in the world, too.

    • a bowling alley near you...come[s] with a bonus titled called, GETTING FRESH AIR
      I don't know what the bowling alleys are like where you live, but this is a patently false statement from all of my experiences.
    • Includes such games as Real World TENNIS (indoor and outdoor versions available)
      Real World BOWLING (available at a bowling alley near you).

      Both games come with a bonus titled called, GETTING FRESH AIR.

      Fresh air? In a bowling alley?

  • Nintendo has been doing this since the very first days of the NES. In the beginning, I think the lesson of Atari's "ET parking lot" was fresh in their minds, and they didn't want to get stuck with warehouses full of crap they can't sell. These days, I have to think that they've figured out that the long term benefit of the frenzy that is created far outweighs any short term losses.

    • Re: (Score:2)

      by jimicus ( 737525 )
      Nintendo has been doing this since the very first days of the NES.

      For over a year post release?

      • Re: (Score:2)

        by Dmala ( 752610 )
        Actually, yes. From what I've read and what I recall, there were holiday shortages of the NES for several years running in the mid-to-late 80s. They kept it going for quite a while with well hyped releases (Zelda, SMB2, etc.) that would cause a big spike in demand.
  • "Wii shortages" heh heh heh

    Yes that's right I went there. Again.

    Anyway I had a thought... isn't this a very good time to advertise the HECK out of the, um, DS? Considering it's cool, makes a good gift, is also appealing to "casual" gamers, and is available? A solid marketing campaign for the DS right about now could sway some people who otherwise will purchase a 360/PS2/PS3 because a Wii is nowhere to be found.
    • The DS gets more marketing in the UK than the Wii. I'd say it's 2/1 towards the DS on TV adverts. Nintendo sponsor the Friday night comedy slot on Channel 4, every 15 minutes 2 adverts for the Wii or DS play (one before and after the break). So it's not like the DS is unadvertised.

      The problem is the DS isn't innovative any more, it's been sold on cute games like Nintendogs and learning games like Brain age, so it's aiming at the 'intelligent' and 'casual' side of the casual market, the Wii is aimed at the '

      • Re: (Score:2)

        by Sciros ( 986030 )
        Well, there's no need to "link" them in the sense that you mean. After all, if Nintendo has concerns about people going out and purchasing a 360 instead of a Wii then we're not really talking about the "family-oriented, casual" market strictly.

        Nintendo's competitors aren't "innovative" in the sense that the Wii is, but if their product is available and Nintendo's isn't then for many that's a moot point. And in the US I don't see a whole lot of DS advertisements, at least not as many as I think I ought to be
    • isn't this a very good time to advertise the HECK out of the, um, DS

      Also, the DS can be used in with the Wii you REALLY wanted and will eventually buy anyway
    • The DS is the highest selling gaming device period. It needs advertising less than the Wii does.

      • Re: (Score:2)

        by Sciros ( 986030 )
        My logic detector isn't picking up any readings!! The Wii can be advertised to high heaven right now but no more units are going to be sold because none are available for purchase. The DS might be highest-selling but Nintendo is likely to move even *more* units if they can keep those who might otherwise opt for a 360 or Playstation this holiday season on "their side."

  • Production Ramp Up (Score:4, Informative)

    by rlp ( 11898 ) on Monday December 17, 2007 @01:11PM (#21727556)
    They've ramped production from 500 thousand / month at release to 1.8 million / month now. That's a pretty sizable production increase. More importantly, I'm not hearing news about DOA units, so they've (so far) avoided compromises in quality while more than tripling production. So, yeah, they completely messed up on demand forecasting. As far as the production ramp-up, I think they've done well.

    • They've ramped production from 500 thousand / month at release to 1.8 million / month now. That's a pretty sizable production increase. More importantly, I'm not hearing news about DOA units, so they've (so far) avoided compromises in quality while more than tripling production.

      I just wanted to point out that quality doesn't drop merely because production levels have increased. Defects are more prevalent at initial ramp up, when the equipment first starts manufacturing a product. Once that ramp up phase is

    • Re:Production Ramp Up (Score:5, Insightful)

      by Leo Sasquatch ( 977162 ) on Monday December 17, 2007 @03:01PM (#21729614)
      There was an article ages ago about this, and the Nintendo guy said something I thought was very telling about their attitude to customers. He said they were ramping up production as far as they could, but to stretch the supply chains any further would mean dealing with component manufacturers and suppliers they neither knew nor trusted. Yes, the result would be a larger supply of Wiis, but a much higher percentage of defective machines; either as soon as the customer got it home, or soon after purchase. They didn't want that to be associated with their brand, and said they'd rather manufacture less consoles, and have them work properly, and hope people would be patient and understand.

      Compare and contrast Microsoft's attitude of denying the problem for ages, then setting aside billions to handle defective machines under extended warranty. My Wii's seen daily use since launch date - all I've ever had to do was change batteries in the Wiimote. If it does break down, I'm stuffed as far as getting another one is concerned, at least for a few more weeks.
  • Just go look on ebay...there are thousands on thousands of them for sale. The reason why no one can get a Wii is because these resellers are buying them in bulk as soon as they can their hands on them. This is inflating the demand for them beyond reality. don't believe me? Just go to ebay and search for the Wii. There are plenty of them out there.

    • Re: (Score:3, Insightful)

      by Skapare ( 16644 )

      Yes, this can be a serious problem. If there is any level of shortage of a product (as many of the latest products coming into the holidays are), EBay will have the effect of making the shortage worse. And it's not the manufacturers that profit from it in this case (apparently); it's whoever has the connections to get those bulk deliveries redirected to them (possibly even stolen).

  • *sigh* (Score:5, Insightful)

    by bigattichouse ( 527527 ) on Monday December 17, 2007 @01:43PM (#21728030) Homepage
    Step 1: Read Peter Senge's Fifth discipline [wikipedia.org]
    Step 2: Understand that the Wii is a perfect example of the Beer distribution game [wikipedia.org]
    Step 3: Realize that demand is at least ONE ORDER of magnitude smaller than reported.

    Case in point: Person X goes to store 1 and asks for a wii, then proceeds to search through store(s) 1-10 ... they may even place orders at each store... when person X gets a wii, they cancel all other orders. So "10" orders really was 1 order.

    If Nintendo attempts to fill the "Billion" in orders, they will greatly overshoot and end up with a flooded market that can't get rid of the damn things. Slow and steady wins this race, a few million in sales lost over the entire potential beats the crap out of overshooting with 100 million dollars worth of hardware sitting on shelves, or ending up in landfills [wikipedia.org]
    • I highly doubt excess unsold Wiis would end up in landfills(literally or metaphorically). IIRC Atari made more copies of the ET game than there were 2600 consoles sold. Wha, you gonna buy TWO copies of the same game? A console itself is different.

    • Re: (Score:2)

      by edwdig ( 47888 )
      I think Nintendo, the retailers, and the analysts are all aware that when Best Buy tells someone they don't have a Wii in stock, the person is most likely going to check the Circuit City down the road if they haven't already. You'd have to be a pretty bad market analyst to not take that into account when you make your projections.

      To deal with it, the stores don't take preorders other than for the initial launch. Nintendo is working with GameStop to take a limited number of preorders (a few tens of thousands

  • Solving the holiday product crunch ... (Score:5, Interesting)

    by Skapare ( 16644 ) on Monday December 17, 2007 @02:09PM (#21728396) Homepage

    I have the solution to solving the holiday product crunch: spread the holidays out over the calendar. In the USA, divide the country up into 12 regions of about the same population and economics. Then assign each region a different month to have the gift giving holidays. Most people don't celebrate Christmas religiously, anymore, so this shouldn't be much of a problem.

    The above does still leave a big crunch at stores and malls within a region. So maybe it's better to divide things up on a micro-scale instead of a macro-scale. So, how about celebrating the gift giving holiday based on (zipcode % 12), where you celebrate gift giving based on your zip code modulo 12 to choose the month.

    This still means a big crunch for families and neighbors in the same zip code. So I have a better idea. Let's use the date of birth to determine when to celebrate the gift giving holiday, based on who the gift is for. And instead of having it all on one day of the month, let's spread it out further and use the actual date in the date of birth for everyone's own personalized gift giving holiday.

    Ooops. I didn't take into account February 29. Never mind.

    • What a perfectly geeky solution. There's a coherent logic to it, and the potential for some math to really optimize it. But it conveniently leaves out the fact that it deals with people, and as soon as you factor the human element into the idea, there are dozens of plainly obvious reasons why it would never ever work.

      But it's still an interesting thought to explore.
  • $30 each for a pair of used GBA SP's, you can't beat that. And used games are $5-20/title at Gamestop. I'll buy a Wii when they come down in price. I said that last year, and it's a year later and you STILL can't find one in stores, so I know I have a bit of a wait in store before they drop down to the $149 pricepoint that I'm waiting for. I don't care, though; I have a good six generations worth of consoles in my spare bedroom and I can't play them all.

  • eBay suggests that Nintendo isn't losing that much (Score:3, Interesting)

    by brokeninside ( 34168 ) on Monday December 17, 2007 @03:36PM (#21730322)

    New Wii units without a multi-controller/multi-game bundle are selling for a fifty to seventy-five dollar price premium over retail. Even if the 15 million units they've sold to date were sold for USD 50 more, Nintendo would only be making an additional 750,000,000 bucks, less than three-quarters of a billion. And that assumes that everyone willing to pay $250 for Wii is also willing to pay $300 for a Wii which I doubt. It seems to me that a large part of the Wii's popularity is its price.

    But more importantly, the lack of a large premium on the Wii from resellers suggest that the present rate of production and price is very close to the market equilibrium. If demand were far outstripping supply, the premium from resellers on eBay would be far higher. If supply were far outstripping demand, we'd be seeing the boxes stack up on the shelves. But from first appearances, it would appear that Nintendo is very close to hitting the sweet spot with their present rate of production.

    • Re:eBay suggests that Nintendo isn't losing that m (Score:4, Interesting)

      by Chris Burke ( 6130 ) on Monday December 17, 2007 @05:14PM (#21731886) Homepage
      But more importantly, the lack of a large premium on the Wii from resellers suggest that the present rate of production and price is very close to the market equilibrium. If demand were far outstripping supply, the premium from resellers on eBay would be far higher.

      Not necessarily. This could instead indicate that the demand is elastic with respect to price. That would mean the demand for $250 Wiis is extremely high, while the demand for $400+ Wiis is very low. An item being in short supply relative to the demand does not automatically mean that the people who want the item would be willing to pay more for it. That usually only applies to what are more or less necessities, like gasoline or food staples.

      This especially makes sense in the context of who the Wii's primary market is -- casual non-gamers. These are people who maybe saw a friend or relative's Wii, played it and had fun, and decided they want one despite not being into any previous game consoles. For them, $250 for a fun toy may seem like it's worth it. If the toy turns out to be hard to find, are they going to decide that they will instead pay $300, $400, or $500 for it? Or are they going to decide that they don't need it that bad, and can wait until more are available?

      It's only the hard-core that are going to be willing to buy their chosen console no matter the price. But even then they're also the ones who'd be willing to call every store in town and show up before they open on shipment day. The latter is the category I fell into. Even I, long-time Nintendo fan boy, wasn't willing to pay scalper mark-ups on a Wii.

      What this implies is that despite some theories to the contrary, the Wii's MSRP is in fact a major selling point.
  • Comment removed based on user account deletion

  • George Harrison (Score:3, Funny)

    by caffeine_monkey ( 576033 ) on Monday December 17, 2007 @03:55PM (#21730654)
    "'We don't feel like we've made any mistakes,' said George Harrison, senior vice president for marketing at Nintendo of America. He added mournfully, "I don't know how someone controlled you. They bought and sold you." And then Eric Clapton launched into a guitar solo.

  • Speculation (Score:4, Interesting)

    by argStyopa ( 232550 ) on Monday December 17, 2007 @04:03PM (#21730772) Journal
    Not sure, but how much of this 'shortage' was deliberate by a subset of consumers that bought Wiis simply for speculative reasons?

    I can find tons (right now I see 9000+) of Wiis on ebay at joke prices. Presumeably almost all of these will go back to the store within a week or two of Christmas.

    Not Nintendo's fault, really.

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