Wii Shortages Costing Nintendo 'A Billion' In Sales 290
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.'"
Let's use the music argument... (Score:5, Insightful)
Wouldn't the same kind of logic hold here? How can Nintendo lose money on nonexistent consoles if they're already at full production?
Aftershocks (Score:5, Insightful)
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
What are people buying instead? (Score:2, Insightful)
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:Curious (Score:5, Insightful)
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.
Re:Let's use the music argument... (Score:4, Insightful)
How to create an artificial demand (Score:1, Insightful)
That said, Nintendo is not 'losing a billion in sales' - they are, in fact, creating 'a billion in sales'. Okay, so the knee-jerk reaction is 'huh, stores are always sold out, I can't get one, they're losing my money - how are they creating sales'. Ironically, the question is its own answer. By restricting sales to North America, keeping the influx of consoles at a relatively low number - compared to actual demand - Nintendo is creating a sense of scarcity. This perceived lack of Wii increases the immediate demand for the console, virtually ensuring that new product delivered to stores will sell out within a day or two - three or four at the outside.
This has the effect of creating a stronger the secondary market on E-bay, Craigslist, or the classifieds. People are willing to snatch them up at ridiculous prices in order to get one NOW, rather than wait a week or two for the next shipment and try to get one then - bird in the hand. This leads to further 'gotta have it' frenzy.
By keeping production where it's at - does anyone REALLY believe they couldn't kick it up a few notches? - they are ensuring that the initial sales life of the console continues for a good long time. During which time they can maintain the price for the console itself, the accessories, and the games. It's a cash cow, a print-your-own-money machine. But the instant they jack up production and flood the market to satisfy all the demand - real and hyped - the consoles start lingering on the shelf longer, it's no longer the console to own, the novelty wears off and sales slump. Why on Earth would they want that!
no one's getting any (Score:4, Insightful)
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:What happened to ramping up? (Score:3, Insightful)
*sigh* (Score:5, Insightful)
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
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]
Re:Where the Wii is (Score:3, Insightful)
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).
Re:Food for thought (Score:3, Insightful)
My two cents.
Re:Food for thought (Score:5, Insightful)
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:Food for thought (Score:3, Insightful)
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, and they may not care about the Wii so much anymore.
Re:Production Ramp Up (Score:5, Insightful)
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.
Re:Let's use the music argument... (Score:3, Insightful)
Re:Ever heard of contract manufacturing? (Score:3, Insightful)
So no, Nintendo doesn't have their own factories where they make wiis from start to finish, but they do have to contract out all the appropriate parts and hope that those manufacturers can meet the demand. If Nintendo wants to instantly increase production, it may very well mean paying a premium for scare parts, which would cause them to lose a guaranteed amount on the increased manufacturing. So they get screwed either way, in which case it's better to stick with all the contracts that were negotiated months ago based on what they thought was a reasonable demand.
Electronics don't just poof into existence. Whether company-owned or outsourced, factories must exist to make products and if those factories can't meet demand, the product won't meet demand.
Wii (Score:3, Insightful)
I don't understand this. The guy next to me at work was all, "I want a wii, they don't have it
on target.com, its sold out blah blah blah". I called ghetto ass gamestop and they had a pile of them
for the regular old price. Of course, the next day he "decided not to get it just yet". Anyway,
Where is the shortage? The day before xmas? News flash, they are also
out of the good barbies, transformers, and anything else interesting until they restock....
Everyone that I know that wanted a Wii went to the store and bought one already.