Nintendo planning to milk its Wii shortage through the holidays

You know, we could understand a few months of Wii shortages, and perhaps we'd let Nintendo slip by the seven month mark with a mild slap on the wrist, but this recent announcement of shortages through the 2007 holidays is just plain annoying. "There is no guarantee that we are not going to have 'out-of-stocks' this holiday season," says George Harrison, senior V.P of marketing for Nintendo of America. "If you see one, buy it. Don't assume that you can come back later and find one." It's not like Nintendo doesn't have the time, cash or know-how to ramp up production. Sure, we don't know all the ins and outs of supply chain management, but it sounds more like Nintendo is enjoying its "can't keep 'em on the shelves" status a bit too much to seriously make an attempt at meeting demand.

[Tom @ Jul 12th 2007 7:47PM]

Just wait until PS3 prices are reduced several times and XBox prices have holiday pricing. The lack of Wii's on the shelves will come back to bite Nintendo in the form of lost sales. They cant play the holiday shortage game twice and expect not to loose sales.

[Jypson @ Jul 12th 2007 7:53PM]

I agree completely. It's a slippery slope they're on, and the competition is really starting to heat up now with all the E3 hype.


-Captain Obvious

[Homeboy @ Jul 12th 2007 8:02PM]

Microsoft is bound to lower the 360 Core to the magic $249 level and the premium to $350. Although that will be enough for me to buy one it will still not affect Wii sales. Lets face the fact, the 360 Core is utterly useless and one is forced to buy the Premium for a proper 360 experience with a hard drive. That means that a proper 360 will still be 100 more expensive than a Wii. Further more the Wii comes with Wii sports.

Sony should be counted out as they will most likely lower the price of the PS3 before the holiday sales but don't expect a big decrease. Sony have been spending too much money on R&D for bluray and the 6 core cell processor to give up by lowering their console to a buck lower than $399. Further more Sony are very stubborn and will stick to their strategy until they win.

Overall I'm impressed that Nintendo has managed to out play Sony and MS using a much more technically inferior product. Still in the long run MS and Sony are going to be the winners. When Sony and MS finally has lots of banging games out on the shells in the coming 1-2 years and Bluray/HD-DVD movies are all over the place, the Wii won't stand a chance.

[JD @ Jul 12th 2007 9:25PM]

You're right, it's rather simple economics. You make the most money when you can sell as many units at the optimal cost as possible- they aren't making as much as they could be, even at $400+ per bundle. They will probably learn a harsh lesson this holiday if the 360 comes down too. It would serve them right, too. Econ 101, Nintendo.... Econ 101.

[Perkoff @ Jul 13th 2007 4:47AM]

Doesn't really matter, every single system they make they will sell.

[jamesmcm @ Jul 20th 2007 3:23AM]

Technically inferior?
How is a revolutionary motion-control system technically inferior.

Graphically inferior maybe...

[Scabies @ Jul 12th 2007 7:49PM]

"If you see one, buy it."
marketing
genius

[Chuckles McGee @ Jul 12th 2007 7:59PM]

Yeah, the Nintendo marketing guy is a genius. Unlike some other marketing advice for other game consoles...
"If you see it, don't buy it. There's a 1 in 3 chance that thing is going to fry- and we'll have to fit the bill for you!!

"If you see it, please don't buy it. Do you have any idea how much money we lose everytime you buy one of those things?? We lose more money everyday on these consoles than I make in a year!! They're SO expensive for us to make, the souls of little orphans aren't cheap."

[Sean @ Jul 12th 2007 9:52PM]

Buy every one you happen to find and then unload them on ebay in December for what you paid (plus shipping of course) to people who really want one for their kids! Instant Karma!

[Jonathan Keim @ Jul 12th 2007 7:50PM]

I was really surprised to check my local walmart and still not see any Wiis availible yesterday.

[Michael R @ Jul 12th 2007 10:20PM]

Don't be surprised to find every big box store out of Wii's for months to come? It not becuase of intentional product shortages from the factory. It's because the Wii is so amazingly fun for all to play.

[Evan @ Jul 12th 2007 10:38PM]

At Target we have at least ten locked away in the back for the upcoming Sunday advertisements. Don't assume Nintendo is the only one playing this game.

[Jamar @ Jul 13th 2007 12:51AM]

(crackpot theory)Over in China there are Wiis everywhere (couldn't have found one otherwise; and pre-modded too)- no game shop I went to *didn't* have one. Maybe this is a ploy to encourage tourism to China?(/crackpot theory)

[HyperHacker @ Jul 13th 2007 2:41AM]

I was quite surprised to walk into my local EB Games and find Wiis in stock.

[humpty @ Jul 12th 2007 7:52PM]

PS2 sales have surpassed 118,000,000 units over almost 8 years.. you dont get to that level by artificially constraining supply and propping up 'demand'.

[dagamer34 @ Jul 12th 2007 8:29PM]

The PS2 was supply constrained during it's first year and most people didn't get one until 2003 after it had been out for 2 years.

[John Doe @ Jul 13th 2007 7:25AM]

Umm no. The PS2 had supply issues for the first 4-6 months. After that you could walk into any store and pick one up.

[darter9000 @ Jul 12th 2007 7:52PM]

I seriously, seriously doubt that Nintendo is enjoying the Wii shortages too much. As you guys may have said, this has gone for a fairly long time, and I wonder if the code reds has started to blare. These shortages might even explain why Nintendo isn't releasing all that many games as of late. Hard to release more games when you need to devote more time and attention into trying to get more consoles out onto the market. Heck, Nintendo's initial statement was that they would definitely have more consoles available than the PS3 at least. So they weren't thinking, "If we sell out, we'll look more popular" like maybe Sony is claiming. I have to be forced to believe that Nintendo isn't bent on the 'image' of high demand and they would actually like to be able to sell more systems. But with both the Wii and the DS enjoying very high demand, it's going to be a rough dancing session for Nintendo for awhile.

[Matt @ Jul 12th 2007 11:39PM]

Have they ramped up production at all since launch? They definitely should have.

[darter9000 @ Jul 13th 2007 1:25AM]

If they have, the only way we can really tell, at this point, is through their shipping numbers. I'm not sure where I could get those numbers, but with the Wii's popularity, I'm sure their weekly sales can give a rough estimate.

[Aaron Walker @ Jul 13th 2007 11:33AM]

What, do you work for Nintendo? Thta's some serious apologist Kool-Aid your passing around.

Nintendo is lying, flat out. The Wii has been available long enough for them to "figure out supply" not to mention the company itself isn't some new upstart but the company many of us got our first taste of this whole "home gaming thing."

They are insulting everyone's intelligence by claiming they are still trying to figure out how to meet demand. This "shortage" is purposeful.

I've have had one since launch, but I'm tired of them lying and people swallowing it hook, line and sinker.

[darter9000 @ Jul 13th 2007 2:06PM]

No, I don't work for Nintendo, but I am an economist. It's not like Nintendo can simply 'dial-a-factory' and tack on a few more Wiis for free. Besides, take a close look at the trajectory of the Wii vs. PS2 sales from date of release, vs. the XBox360 from date of release, or even vs. the PS3 from date of release. Don't you notice it's unusually fast? How can you claim that Nintendo is completely ready for an unprecedented surge of demand? Moreover, how does any company really benefit from constant shortages? It's not like the CEO of Nintendo is selling millions of Wiis on eBay. If you're going to claim Nintendo is lying at least come up with some proof that Nintendo is lying.

BTW, here's a Wii vs. PS2 vs. XBOX360 sales numbers had they been each released on the same day.
http://vgchartz.com/hwcomps.php?cons1=Wii®1=All&cons2=PS2®2=All&cons3=X360®3=All&align=1

[Blacksheep @ Jul 12th 2007 7:54PM]

This is really lame Nintendo. I wanted a Wii since it came out, and I've been searching for months to get one with no avail. I know you know how to up production, there were more Super Nintendo's and Nintendo 64's then you could shake a stick at back in the day. This however, is a blatant marketing tactic. There is no way in hell you can't figure out how to up production in the next 6 months!

It's making me angry, and I may just decide not to purchase a Wii at all. I'm more than content playing games on my PC, or maybe I'll buy an XBOX 360 if it's lowered to the price of a Wii instead.

Get them on the shelves!

[Mr.Ortiz @ Jul 12th 2007 8:44PM]

To be fair, they are selling about a million a month, globally. If you really want one, you should double down on your efforts before Wii Fit comes out. That thing is gonna be just as huge with casual gamers as Wii Sports.

[Arthur Nonamiss @ Jul 12th 2007 9:14PM]

I don't mean to sound condescending, but do you even have any idea how the economics behind large scale manufacturing work? It's easy to sit there and say "ramp up production!" but I honestly doubt you've ever brought a manufactured product to market in large scale.

Nintendo could have easily brought 200 new factories online by now and started pumping out Wiis, but then what happens in 6 months when the high demand has been met? Those factories aren't free to open, you know. They're quite expensive. Unlike Sony and Microsoft, Nintendo actually knows how to make money on console sales. Did you know that all through the GameCube years, despite being a distant 3rd place in the console race, Nintendo still made money. Lots of money. Did you know that Microsoft's gaming division has NEVER made money? Sony's gaming division is HEMORRHAGING money right now. They're dropping their prices WAY below cost because they're getting their butts handed to them. They put a lot of eggs in the PS3 basket, and that basket overturned. Since they have money to burn, they'll ultimately be successful, but their stockholders are not happy at all right now.

So before you go talking about how Nintendo should "just ramp up production" make sure you realize that the other manufacturers (Specifically Sony, but Microsoft a little, too) aren't really trying to make money right now. They're trying to put Nintendo out of business. Why else would you sell a console at less than half the production cost?

Nintendo has been in business for 118 years. That's right. 118 years. They know how to do things. They're playing the "slow and steady" game right now. If they can make it through this production shortage, then they'll come out smelling like roses, because they won't have lots of empty factories that cost them millions to open.

[Jamar @ Jul 13th 2007 12:54AM]

Like I said earlier in this page, get your rear to Shanghai, China if you want a Wii. They're everywhere over there (pre-modded for convenience). They know how to ramp up production- it just isn't reaching the States.

[yao @ Jul 13th 2007 2:45AM]

re: Arthur Nonamiss's condescending comment.

i do work in the electronics/computer industry and can tell you that ramping up capacity, while not trivial, is not difficult at all. contract manufacturers in asia are lining up to try to get this sort of business. ramping up a new CM would take a few months at most. your comments on "how manufacturing works" reveal your lack of knowledge of the business.

[Josh @ Jul 13th 2007 4:32AM]

You seem to forget that they dont just need to ramp up production, they need to maintain quality while doing it.

Nintendo has a very very good warrantee, and very good tech support, some of the best in the world honestly, (when you call them you almost feel guilty for troubling such nice people) proably owing a lot to the fact that most of their consoles almost never break. If they were to just outsource production to various factories you dont think they would also sacrifice something a lot more precious, their brand identity for great customer service and reliability?

[Nick @ Jul 13th 2007 9:21AM]

@ yao

thats great except alot of CM in asia would love the business just so that they can produce something.. but so they can learn tech tips and secrets from the company they are manufacturing for. And as Josh stated... you need to make sure that the quality is gonna stay true to the standards of Nintendo and many of those CMs just lining up to get this kind of business isnt going to keep the quality.

[Giuseppe Accardo @ Jul 12th 2007 7:56PM]

I understand that the PS3 with its blue diode could be kinda of difficult to manifacture .. but the WII ?!?!? ... Please WIINTENDO just fit those unsold GameCubes into the Wii chassis and u will make a lot of young kids and old grannies happy this holiday season !!

[HyperHacker @ Jul 13th 2007 2:45AM]

It's not that simple. They have to stick wifi and bluetooth in there too.

[Perkoff @ Jul 13th 2007 4:47AM]

Good one!

[kevo @ Jul 12th 2007 7:58PM]

It's not surprising to hear this from the VP of marketing. If their VP of supply chain agrees however, then it is time to start chopping heads off.

[lb60 @ Jul 12th 2007 7:59PM]

You guys need to understand basic accounting concepts. This is a pure case of earnings management (smoothing). The company wants stable, growing earnings to make earnings predictable, thus putting a high and steady growth rate on the company. Nobody is going to buy a stock if the earnings seem to jump around (unless you're a smart investor). Kids.

[Craig @ Jul 12th 2007 9:41PM]

if nintendo were to smooth earnings, it would do so by managing when it recognizes income or messing with reserve accounts, not by constraining sales. it's not going to risk the console war and ultimately its existence as a company for smoother earnings. kid.

[The Aggie CEO™ @ Jul 12th 2007 8:10PM]

Sounds good to me..........

hell I've sold 10 on eBay that I paid $265 for IN store and sold for $300+

so hell...........its good for eBay sellers.........lol

[Perkoff @ Jul 13th 2007 4:48AM]

Get a job.

[nyuhsuk @ Jul 13th 2007 6:17AM]

Perkoff

+1

[The Aggie CEO™ @ Jul 13th 2007 9:57AM]

LMAO!!!! I have a Job.........nothing wrong with making MORE money

[geezer @ Jul 12th 2007 8:13PM]

I don't care..IÄm gonna buy a Wee äh sorry Wii this weekend! And my girl already told me to look out for a Wii fit - that's gonna bee the great new thing and top seller!

[ddaw735 @ Jul 12th 2007 8:16PM]

Dude not cool.
Watch your mouth.

[hans @ Jul 12th 2007 8:31PM]

i was one of the suckers that camped and bought one of these on launch day. lamest console i've ever owned. i wonder how many people like me have their wii's turn into papers weights after a few weeks.

[The Aggie CEO™ @ Jul 12th 2007 8:33PM]

you're goin to hell...........

[Amber-Daisie @ Jul 12th 2007 8:35PM]

Come on, they've got to split supplies between North America, Japan, Europe, and Australia. They've sold 3+ million in just the US by June 2nd. Then they have to think about Europe and Asia, wait but I'm sure you want them to just ship to the US, right? Seriously I think when you ship 400,000 on avg a month globally that's pretty descent. If you don't like that they're sold out, take it up with E-bayer's. I see over a 1,000 listings on there right now. Still do we have all the numbers? I mean how many places are there setup to start manufacturing right now? If they aren't careful about how they go about this, they may get flak like apple did with the Fox conn incident. Then consider how many people are buying the Wii and what kind of people? I don't see many grandparents buying the 360/PS3 for themselves.

[Azizi @ Jul 12th 2007 8:37PM]

best buy gets new shipments on sundays, as do most other stores. in florida at least. i assume if not sunday, there's a specific day at your store. find out when, show up early, and you'll be rewarded.

[Decius @ Jul 13th 2007 3:54AM]

Yeah, I work at Best Buy, and just about every other Sunday, we'll have the Wiis in the weekly ad. Just call Saturday nights, most of the people in store will tell you when we're expecting them in.

But I'm also from Florida, so....

[themauirob @ Jul 12th 2007 8:38PM]

Anyone who thinks the Wii shortage is the result of some sort of calculated marketing scheme is pretty naive. It's simple. Nintendo has some serious production problems. Their marketing dep't is basically just trying to save face with this whole "If you see one, buy it" bs. With such a competitive game console market, why would any company in their right mind risk losing consumers today in exchange for bogus "marketing hype"? Nintendo's also competing with other types of CE companies for customer $$. Many average consumers make purchase decisions between product X and Y, even though product X and Y are completely different products. For example, there are probably thousands of consumers Nintendo missed out on because instead of buying a Wii they couldn't find, these consumers ended up buying an iPhone/gps/Zune/whatever. Unlike most people on this site, the average consumer does not buy every CE product they desire.

Creating an artificial shortage is even more illogical when you consider the fact that Nintendo also makes their own games. Thus, by not maximizing the "installed" Wii base, they are losing out on future game $$ as well.

re: the "smoothing earnings" post, while many companies do try to do this, the costs to Nintendo for doing this vs. the benefits are too great. I'd love to attend the board meeting where investors ask about why Nintendo sold only ABC Wii units when market research showed there was 2 x ABC demanded, and the CEO responding "well, you see... we feel it's important to smooth earnings"

[chris @ Jul 13th 2007 3:03PM]

Well Said.

[skaaman @ Jul 23rd 2007 5:22PM]

Yeah but...

Funny how you can pick up a bundle from gamestop or walmart and have it delivered usually under 2 weeks from time of order. Those bundles usually command double the price of the console with the add-ons. Also, it's interesting to note while you can order a bundle and get it fulfilled, you CAN'T order just the console and get fulfilled. The shortage is a scam to boost demand and sell higher priced bundles.

[rdrunner @ Jul 12th 2007 8:41PM]

No matter how you cut it, demand that exceeds supply is a good thing for the company's bottom line( ie, sales and earnings). While Nintendo is enjoying unprecedented growth, MS and Sony are trying to maintain sales but would prefer to see profits.
The public doesn't need to know any better about which product is superior or how much supply is available. It knows what products it likes and the prices that are comforting. And the stock market can be very rewarding to a company that connects with it's market.

The consumer wants more Nintendo. MS and Sony wants more consumers. Unless things change drastically this fall and holiday season, Nintendo will probably do just fine.