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

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.

[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.

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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

[KGIII]

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