Nintendo Faces Supply Issues Ahead of Holiday Season

Takashi Mochizuki and Sarah E. Needleman report via The Wall Street Journal (Warning: source may be paywalled; alternative source): Nintendo's latest videogame machine, the Nintendo Switch, is winning fans for both its lineup of popular games and its flexibility -- it works as both a living-room console and a hand-held device. But the real challenge for gamers has been actually getting their hands on it. Production isn't keeping up with demand in Japan, resulting in blockbuster queues and lotteries there. Over weekends in July and early August, tens of thousands of fans lined up at stores for a one-in-10 chance to buy the $300 console at events that have become a form of entertainment. Nintendo's official target is to ship 10 million Switch units in its current fiscal year ending in March 2018. People involved in the supply chain say they have been told to prepare for 18 million units. One executive in the supply chain said his company was ready to pick up the pace of production if asked. One delicate balance for Nintendo: The more it tries to boost output quickly, the more it has to bow to the terms of parts makers, some of whom are also busy with orders for Apple Inc.'s next iPhone. "We're doing everything we can to make sure everyone who wants to buy a Nintendo Switch system can do so," Nintendo said in a statement. "We will ramp up production for the holiday period, which has been factored into our forecast."

Comments

Who cares about the Switch, make more SNES

[HalAtWork]

The SNES Classic is the item that won't be around next year, they need to make more of those. Nobody can get one, preorder availability was pathetic. Switch has a couple of games I want to play, SNES Classic has at least 10. Just make more of those.

Yes I have a SNES but not all of these games, but I want Star Fox 2, new official controllers, and a HDMI out.

Re: Who cares about the Switch, make more SNES

[MBGMorden]

For whatever reason, I've found that while Nintendo is amazing at game design, they SUCK at general software design. If you look at the dashboard setup for any of their systems it's horrendous, and like you said transferring games becomes a nightmare. Half the stuff wants to stick with the console rather than a central account.

I don't get it - half their problems are so obvious that anybody with half a brain could tell the coders "Just make it work this way" and fix a ton of issues.

Re: Who cares about the Switch, make more SNES

[courteaudotbiz]

Nintendo is, for some reason, seriously just *trying* to piss people off as best as I can tell.

I personaly think they're doing a tremendous job at pissing ME off. Living in Quebec, just because they won't translate TFM in French, the SNES will not be available for sale at all here.

I've been trying to put my hands on the NES Classic since it (didnt) hit the shelves, but to no avail.

The only people making hard cash on these short supplies are the resellers, cause they pay 100$ for the console and resell it for 300$. Suckerz.

Re: Who cares about the Switch, make more SNES

[DontBeAMoran]

You can also blame the fucking Office de la langue française. It's these fuckers' fault we can't get stuff here because of archaic laws. This is 2017, you either read english or you're stuck with 1% of the Internet.

Re: Who cares about the Switch, make more SNES

[DontBeAMoran]

Official Nintendo SNES gamepad -> ATtiny85 -> USB HID gamepad.

Re:Who cares about the Switch, make more SNES

[barc0001]

You do realize both systems use entirely different components and production lines, right? So shutting one line down won't make any more of the other.

Re: Who cares about the Switch, make more SNES

[KGIII]

Yes, but you have ketchup chips. That makes up for everything.

Re: Who cares about the Switch, make more SNES

[drinkypoo]

For whatever reason, I've found that while Nintendo is amazing at game design, they SUCK at general software design. If you look at the dashboard setup for any of their systems it's horrendous, and like you said transferring games becomes a nightmare. Half the stuff wants to stick with the console rather than a central account.

No, that's the system working as designed. Nintendo would like you to buy the software again, and again, and again.

I don't get it - half their problems are so obvious that anybody with half a brain could tell

...that they are doing it on purpose to take advantage of addicts who will pay for the privilege of being pissed upon.

Re: Who cares about the Switch, make more SNES

[FrankOVD]

I have heard that they translated the games for European french countries but won't bother putting these games in an north american version of the consome. Is that right?

Re: Who cares about the Switch, make more SNES

[AmiMoJo]

The NES Classic was sold in France, translated into French, and the SNES Classic is due for release there.

My guess would be that they couldn't be bothered to port the translation over to the North American software release.

Re: Who cares about the Switch, make more SNES

[FrankOVD]

The Office de la Langue Française has nothing to do with that. Nintendo simply plans to sell to few consoles to make it worth making a french north american version of the console. The SNES Mini will be available in France though

Re: Who cares about the Switch, make more SNES

[DontBeAMoran]

So why not make all consoles world-wide multilingual? Doesn't HDMI and external power supplies render the "country" problem obsolete? All you end up with as a problem is trilingual packaging for the USA/Canada/Mexico.

Re: Who cares about the Switch, make more SNES

[OrangeTide]

I'd like to see the Virtual Console hit Android and iPhone markets. Because I haven't re-bought the same 90's games enough times.

Re:Who cares about the Switch, make more SNES

[barc0001]

You do realize that Nintendo has buckets of cash so if they wanted to produce more SNES (assuming their preferred manufacturing partners have capacity) they'd just throw money at it and it would be done, there's no need to "starve" the Switch production?

And if it did somehow come down to a choice between making Switches or SNES classics, anyone with two brain cells to rub together would of course choose the Switch. SNES classic is a little one-time toy like the NES classic. Growing the Switch install base quickly is top priority for long term health of the company. More Switches = more developers publishing for Switch = more games sold = more royalties for Nintendo on every Switch game sold. Why make $20 off a SNES classic once when you can make $40 off a Switch at sale, than another $2-$5 every time that Switch owner buys another game?

Re: Who cares about the Switch, make more SNES

[ShanghaiBill]

I have heard that they translated the games for European french countries but won't bother putting these games in an north american version of the consome.

France has a population of 67M. Quebec has a population of 8M, and about 20% of those don't speak French as their first language. About 40% of Quebecois can speak English, and among younger people likely to buy this game the percentage is even higher. People willing to play it in English can order on-line, so the amount of lost retail sales is not high.

Re: Who cares about the Switch, make more SNES

[HalAtWork]

SNES games age OK, these games hold up and can easily stand alongside downloadable games being released today, they are often fine bite sized affairs, different takes on companions to their modern iterations that are still fun.

Do people care?

[ufpdom]

I was in Bestbuy the other day and saw 12 in a case and 9 in Target. I'm seeing them on shelves now so can't say its a supply issue unless people don't want it.. Just my 2 cents.

Re: Do people care?

[Thundercat007]

Agreed I remember the launch, the hype etc. Local store sold 1.

Re:Do people care?

[arth1]

There are regional differences, for sure.
Where I am, there's not a Switch to be found, and none online either, unless you're willing to pay more than MSRP.

Re:Do people care?

[youngone]

My local supplier has discounted them heavily. I don't think they're selling very well here, but then they are expensive for what they are, so that might be the problem.

Re:Do people care?

[TheLongshot]

I think it is only recently that they have started to be regularly in stock in stores. In any case, the holidays are a different story and is often when consoles see their biggest sales. Better make sure you don't have supply problems then.

Re:Do people care?

[renegadesx]

I live in Australia and they are everywhere. No shortages in sight.

Re:Do people care?

[thegarbz]

I was in Bestbuy the other day and saw 12 in a case and 9 in Target. I'm seeing them on shelves now so can't say its a supply issue unless people don't want it.. Just my 2 cents.

Yes because Bestbuy and Japan are totally the same thing. Meanwhile they were available on the shelf in Australia while there were Europe wide shortages which caused us to have to wait 4 months before we got our hands on a unit.

Re:Do people care?

[thegarbz]

The shortages are very regional. They were gathering dust on the shelf in Australia at the time every supplier gave us a 4 month lead time in Europe. No doubt this is the same thing that is happening in Japan.

Will the fricken ads start also?

[Tablizer]

It's gajillion degrees outside and you are talking about Xmas? Coal in your stocking.

Re:Will the fricken ads start also?

[turkeydance]

Coal or nukes or something has to provide the energy to make 'em and get 'em to your hands.

Re:Will the fricken ads start also?

[Anonymous Coward]

Dude, "Back to School" hit the stores over a month ago, and so did the Halloween stuff.

I've already seen the first winter coats in stores, and if you look hard enough, you might even see a couple of teasers of Christmas stuff buried in some shelves.

In case you haven't noticed, this shit is well under way ... retailers are usually at least 3-4 months ahead of the actual season.

Which is why you can't buy bug spray and sun screen where I live in August, because they've already moved on to fall and winter shit by then.

Re:Will the fricken ads start also?

[Tablizer]

Then maybe the Fox "War on Xmas" conspiracy is correct: liberals concoct global warming hoax to claim it's too hot to have Xmas. It's all falling into place now. (All while faking moon landings and covering up H's 38 murders. That's a lot of murders for somebody with {alleged} Parkinson's disease. Maybe she wiggles her victims to death.)

No way it's not intentional.

[SvnLyrBrto]

This has become such a recurring theme with Nintendo that I can no longer believe it's anything but an intentional campaign to drive up hype with false shortages. Its not like they could be having hardware yield issues. It's been ages since Nintendo's hardware was anywhere near cutting edge. The NES Classic especially was just a bog-standard ARM with an emulator tacked on... the sort of kit that could easily be sourced by the hundred million from China. So there's no excuse for a production constraint. A failure in demand forecasting could be understandable once or twice. But after a few shortages, someone should and would have been fired for incompetence and replaced if said shortages were anything but intentional.

Basically, Nintendo is just screwing with us intentionally at this point. If I ever develop an insatiable desire for classic Mario; RetroPi looks the way to go. I'm certainly not going to go stand in their stupid lines.

Re:No way it's not intentional.

[Dutch Gun]

I think perhaps there's a different explanation. Nintendo is all about keeping hardware profitable, and they do this not only by using low-to-mid range component specs, but perhaps also by not over-investing in production capabilities. If you built production to meet initial peak demand, you'd probably waste a lot of capital building capacity you don't need later in the product life-cycle, as demand slows down and stabilizes.

I fail to see the logic in any company intentionally neglecting to supply expected demand for reasons other than a lack of capacity. It's the same argument that claims people or businesses only donate because of charitable tax-deductions or write-offs. The failure of that argument is that whatever savings are achieved via the tax writeoffs are far less than the value of what you donated to the charities. It's not really a money-making proposition - only an incentive. I think the same applies here. Whatever Nintendo theoretically gains via shortages are probably more than lost due to lack of sales. It's not like they're jacking up the prices of their hardware when demand exceeds supply (although plenty of scalpers do).

If anything, I guess you could argue that Nintendo is keeping production capacity low to protect their long term profits at the expense of their customers' convenience, forcing them to wait longer for the consoles they want.

Re:No way it's not intentional.

[drinkypoo]

Nintendo is all about keeping hardware profitable, and they do this not only by using low-to-mid range component specs, but perhaps also by not over-investing in production capabilities.

Nintendo consoles are built by children working for Foxconn, not by Nintendo. Presumably they just can't whip the children fast enough

Re: No way it's not intentional.

[Ebsolas]

You are ignoring the NAND shortage. Nintendo is in direct competition with Apple, a company with a nearly bottomless wallet, for procuring flash memory for their products which are in high demand. Apple is currently buying a lot of memory for its new upcoming Iphone model, which it expects to sell better than previous generations, and they're willing to pay to ensure that they can get as much NAND memory as they can. Of course this is a worldwide shortage of NAND so SSD makers and any company who needs flash storage are also competing as well. Now ignoring the Switch for a moment and looking at the SNES classic, the reason for Nintendo's inadequate numbers is because they wanted to make a limited edition product that would be a collector's item. That said their reasoning is entirely stupid and they should just make the product in a quantity that everyone can buy it. People want to and it could make them a lot of money. It's not like they'll make anything off the second hand market where it'll actually sell for a high price. (Btw sorry for the wall of text. I'm on mobile and slashdot keeps removing any attempt I try at creating paragraphs)

Re:No way it's not intentional.

[thegarbz]

Its not like they could be having hardware yield issues. It's been ages since Nintendo's hardware was anywhere near cutting edge.

That is precisely THE problem with their hardware yield. They aren't top of the line, they are off the shelf. That means that they compete with other companies using off the shelf parts and the Switch shares hardware components with many popular mobile devices. Also the problem of Apple's influence on the market. The launch shortages on the Switch were entirely the fault of being unable to source the displays as the company which produced them previously supported Apple basically went bankrupt when Apple switched to OLED. Then Toshiba were unable to supply NAND chips, and the company producing the force feedback shakers were unable to do that either.

The problem here is that the Switch is a game console sold on a very limited profit margin. They can't outbid vendors of overpriced smartphones for parts.

The NES Classic especially was just a bog-standard ARM with an emulator tacked on... the sort of kit that could easily be sourced by the hundred million from China. So there's no excuse for a production constraint.

The NES Classic was intentional supply restriction. They wanted it to be a "limited edition" device from the get go. There was an entirely different strategy and purpose behind this console and the Switch, which is also why they stopped producing it when they launched the Switch. They were only using it to tease fans.

Re:No way it's not intentional.

[tlhIngan]

This has become such a recurring theme with Nintendo that I can no longer believe it's anything but an intentional campaign to drive up hype with false shortages. Its not like they could be having hardware yield issues. It's been ages since Nintendo's hardware was anywhere near cutting edge. The NES Classic especially was just a bog-standard ARM with an emulator tacked on... the sort of kit that could easily be sourced by the hundred million from China. So there's no excuse for a production constraint. A failure in demand forecasting could be understandable once or twice. But after a few shortages, someone should and would have been fired for incompetence and replaced if said shortages were anything but intentional.

Basically, Nintendo is just screwing with us intentionally at this point. If I ever develop an insatiable desire for classic Mario; RetroPi looks the way to go. I'm certainly not going to go stand in their stupid lines.

Actually, you're not wrong. Nintendo is famously known for under-supplying product, and this goes all the way back to the NES.

Yes, even in the NES days Nintendo deliberately short-produced product and rationed it to retailers. It was one way they put retailers on short leashes - if anyone decided to do something Nintendo didn't like, they'd cut what the retailer got.

Hell, even in the NES days Nintendo even deliberately short-produced cartridges! They claimed it was a production problem, but one that only seemed to have developers on a short leash (who were required to buy their cartridges from Nintendo).

Nintendo lives off the hype produced by short-selling. In fact, the only times I noted that Nintendo didn't actually short-ship was when there was actual competition. The Wii was easy to get on launch day - it was only the hype generated a week or two later with everyone and their grandma wanting one that ti became hard to get (Wii having launched on same day as PS3). And the later part of the Nintendo DS, when Sony was pushing their PSP as well as later on the PS Vita, it was easy to get Nintendo DSi, DSi XL, 3DS, etc units. Only when the PS VIta imploded did stock of the 3DS actually start diminishing.

The hype of selling out runs out pretty damn quick though - eventually people migrate to other systems, and you can bet Sony and Microsoft will be very aggressive this holiday season. Especially Microsoft, who saw how fast XBOX preorders went that they committed to extra production and thus opened preorders up again (only to have them go even quicker) - they know those XBOX buyers will sell their old consoles so this is a way to flood the market with cheaper consoles and cause serious competition.

Microsoft's doing it because people who want an XBOX and can't get one may buy a PS4 Pro instead, so ensuring people get what they want is key.

Nintendo's shortchanging the consumer, and they've been doing it for years. Though I'm surprised Switch availability is still hard, since in my shopping travels, if you can wait up to a week, I'll find a switch in a store somewhere without lining up - just on my walk or other regular shopping trip. Heck on Saturday evening I was at Wal-mart, and they had 4 new Switches. (They had 1 a couple of weeks ago, but in the intervening time, I saw Best Buy and others got Switches too).

Nintendo's thinking on the SNES Classic I don't get. Unless there were license limits (i.e., they could only sell 2.5M units total because the license holders let them sell that many) they could easily made twice that number. Or even bump up the price to $100 and still sell. And was there really any harm letting a few units sit on store shelves? Being able to pick one up even if they were out of production means they will move and it also means you produced just enough.

Re:No way it's not intentional.

[AmiMoJo]

In Nintendo's defence, they probably didn't expect the Switch to sell that well. The Wii did okay, the Wii U didn't...

But yeah, if there are shortages of the SNES Classic, that's unforgivable. It's kind of insane that they decided not to make more NES Classics, given that they were basically a licence to print money.

Re: No way it's not intentional.

[Anonymous Coward]

Your shitty, sarcastic attitude is really uncalled for given how ignorant you are.

For one thing, Webhallen is only one retailer. For another thing, there are all of about 20 stores in the entire country, and that's if you count their mail-order service (which has over 50 in stock all on its own). For yet another thing, Webhallen isn't at all like shitty game stores like Gamestop, they don't *let* their employees take anything home for "testing". Further still, their web inventory is as close to accurate as possible: When I went and bought my Switch, I could plainly see 8+ boxed consoles on the shelf directly behind the cash register, and that seemed to square up with that location's listing of having 14 in stock. Which, by the way, went down to 13 within an hour of me picking mine up, and seems to have gone down to 9 in stock since Thursday.

But what would I know? I only bought a Switch last week after jumping through the insurmountable hoop of just dropping one into my Webhallen shopping basket, checking out online, and then picking it up at a local store. I only work at a game company here in Stockholm with numerous other coworkers who have bought Switches, also without an issues.

Hey, if you want to believe that there's some grand conspiracy by Nintendo to ruthlessly drive up prices, so much so that you'll believe the jackasses in your own head rather than people who have actually gone and bought one with no issue, then more power to you, buddy, but that must be a pretty miserable existence, thinking the whole world is against you.

Re:No way it's not intentional.

[FrankOVD]

Exactly! Sadly...

Re:No way it's not intentional.

[SvnLyrBrto]

So... Your argument that is that Nintendo has been engaged in fake-shortage shenanigans since back in the dark ages or yore... so I should therefore forgive them the same shenanigans now. It's not the 1980s anymore. Shortages don't fly anymore. "6-8 weeks for delivery" doesn't fly anymore.

By all accounts, a $40 Pi delivers all the functionality and performance, save the pretty "retro" case. Is Raspberry can deliver, why can't Nintendo?

Re:No way it's not intentional.

[Mitreya]

argument that claims people or businesses only donate because of charitable tax-deductions or write-offs. The failure of that argument is that whatever savings are achieved via the tax writeoffs are far less than the value of what you donated to the charities.

That's only true if the business is donating cash.
I believe quite a few companies (e.g., Microsoft) have been known to donate software. Even donating things like hardware, there may be an opportunity to write off retail price, not the true cost.

Re:No way it's not intentional.

[Waccoon]

That works assuming that fans have enough patience. Everyone I know who couldn't get an NES classic just turned to emulation instead.

Obvious solution:

[Gravis Zero]

All you have to do is buy one made by another company. It's just a brand name, how different could it be? ;)

Comment removed

[account_deleted]

Comment removed based on user account deletion

Nintendo obviously screwed up

[93 Escort Wagon]

If they'd just follow the WiiU playbook again, they'd have no supply chain issues at all!

Re:Nintendo obviously screwed up

[thegarbz]

I'm interested in your thoughts. When you have a product with close to zero profit margin and your competing against other vendors with deep pockets when negotiating with suppliers what do you do?

a) attempt to outbid and sell the unit at a loss.
b) don't sacrifice your profit, create scarcity which in turn has some very positive marketing effects and drives sales even harder.

If they screwed up in your eyes, then you're not thinking.

Re:Nintendo obviously screwed up

[93 Escort Wagon]

Check your humor detector - I think it may be malfunctioning. But here you go:

When you have a device that almost no one wants to purchase, the lack of demand means you're generally not going to run into problems acquiring the parts you need to build it. Hence, no supply chain issues.

It's not a problem it's a plan.

[dicobalt]

This is what Nintendo does, it's their thing, it's an old school marketing tactic to create desirability for a product.

Re:It's not a problem it's a plan.

[neo-mkrey]

Well, then, they have failed as far as I am concerned. I desire nothing Nintendo currently makes.

Re: Naww you can have em

[Ebsolas]

That's kind of Nintendo's thing isn't it? Try to create a new experiences that people haven't experienced before. It is what makes them money after all. The Wii u had some legitimately good games after all, Sm4sh, Splatoon, Poken tournament, among others, so of you didn't have fun with the system that's your fault. IMO I think the Wii U's failure was the admittedly stupid decision to call it Wii U and confuse customers who thought it was just another Wii with a bigger controller, which if they already have a Wii why would they need another. Their other mistake was making said bigger controller unable to work apart from the system.

MOD PARENT UP

[rsmith-mac]

The problem here is that the Switch is a game console sold on a very limited profit margin. They can't outbid vendors of overpriced smartphones for parts.

This is exactly the case. Assuming Nintendo can even get extra assembly capacity, they're almost certainly bottlenecked by one (or more) of the following 4 components.

• NAND: Outright shortage that has everyone scrambling to get chips, and has significantly driving up prices on anything that makes it to the spot market. This is a significant boom in a traditional boom/bust cycle, and won't abate until demand drops or more capacity comes online (which takes a long time, and everyone is hesitant to do for fear of starting a bust)
• DRAM: The same problem as NAND, since they are complementary goods and made by the same manufacturers.
• SoC: TSMC's 20nm line shares a bunch of back-end equipment with their 16nm line, which is currently running at full capacity. It is unlikely that NVIDIA can get more TX1 orders in without paying more per unit for them
• MEMS: These devices aren't in an outright shortage, but they are in high demand.

At the end of the day this is all about economics. Nintendo could increase their priority, but they'd have to pay more. And given the thin margins on the hardware to start with, they'd have to increase prices. (Which I'd be okay with, but most people would not, I suspect)

Re:MOD PARENT UP

[SvnLyrBrto]

Raspberry doesn't seem to have any difficulties keeping their yield for there Pi 3 up. There're a dozen different packages I can get with Prime 2-day delivery on Amazon alone. And by all accounts that I've read, the only significant difference Pi + Raspbian and Nintendo is the nifty "classic" plastic case.

We're talking about an educational foundation versus a major international corporation here. The latter should not have it harder than the former. (And tellingly, Sony and Microsoft have all their kit in stock wherever I'd want to buy it too.)

Re:MOD PARENT UP

[SvnLyrBrto]

Meant to type RetroPI, not Raspbian. But you get the point.

Re:MOD PARENT UP

[thegarbz]

You may want to re-read my post, focus on the first sentence of my last paragraph.

...and water is wet

[Robert Goatse]

Shocker! Nintendo can't fulfill orders for XYZ gaming system. After the recent NES classic device that was nowhere to be seen, save for a handful of price gougers, I don't even bother getting spun up about Nintendo's issues. I don't care about anything they have to offer. If I need to play Donkey Kong or Mario Brothers, I'll spin up an emulator and go to town.

False

[bobmajdakjr]

nintendo does not face or experience supply issues. nintendo /creates/ supply issues. they are king of artificial scarcity.