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Wii Shortages Costing Nintendo 'A Billion' In Sales
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.'"
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?
Goo goo g'joob.
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
"The past was erased, the erasure was forgotten, the lie became truth." ~1984 George Orwell
"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 like to lick butts!" by MobileTatsu-NJG (#32700246) (Score:5, Informative)
Step 1: Read Peter Senge's Fifth discipline
... 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.
Step 2: Understand that the Wii is a perfect example of the Beer distribution game
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
meh
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.
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.