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Why the Wii Shortage is Legit

Enough with the rumors of constrained supply of the Wii during this holiday season! Many otherwise rational people believe that Nintendo is purposely causing a shortage of its still highly-demanded home console. Hopefully you can understand not just why that's economically preposterous and bad business, but also patently false.

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wii.advancedmn.com
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Cat3612d ago (Edited 3612d ago )

nice to get another perspective on the much debated topic. while good points are made, and I certainly don't buy into the assertion that there's a mountain of wii's in a Nintendo holding tank, I remain skeptical of the situation. I have witnessed first hand wii's being stockpiled on the retail end (much to my personal frustration) and marvel at a business model that has such inelastic supply for an overwhelmingly successful product -- even considering the overwhelming demand.

ItsDubC3612d ago

Producing 1.8 million Wiis a month is quite an amazing feat, shortage or not. But Nintendo managed to sell 650,000 Wiis in the two weeks prior to this one, which is more than the entire month of October. If that trend continues, then I suppose we can conclude that Nintendo has indeed been stockpiling Wiis for the holiday season.

Kholinar3612d ago

There was an excellent Slashdot post about this topic, seems worth repeating:

"The Wii is the fastest selling console in history, and is currently selling at about four times the rate of the Xbox 360. Is it that hard to believe that sales are genuinely exceeding expectations? Certainly at launch time, very few of the pundits or fanboys were seriously predicting sales of this magnitude. Also, Nintendo has been increasing production significantly - from 1M to 1.8M per month. That doesn't exactly lend credibility to your theory that the shortage is completely artificial.

Besides, do you really think Nintendo was equipped to predict the Wii's popularity in new markets, such as retirement homes? I simply don't see any way that demand hasn't far exceeded Nintendo's expectations.

An artificial shortage would only help Nintendo if it enabled them to sell more consoles in the long run or if it enabled them to jack up prices. They obviously aren't going to increase the price, so how might an artificial shortage still lead to increased sales in the long run? Earlier in the year, it would have been reasonable to say that they wanted to wait until there were some solid games out, but with the hype about Super Mario Galaxy, it seems pretty clear that that time is over. So, if Nintendo is capable of making significant production increases, why wait?"

by 644bd346996 (1012333) on Thursday November 29, @11:55AM

PS360WII3612d ago

Yes very nice indeed. I just don't get the whole argument though. Nintendo for the past while hasn't had this kind of limelight and only have so many places making their product. As the article states they are producing at the max. Without really knowing if this consistant buying will go on for another year they have no intentions of getting another factory up and running for more consoles. It doesn't matter that the most of the components are "easy" to make as some haters would suggest. It's a matter that they don't have enough people to put it all together and still have it work.

Kholinar3612d ago

"It doesn't matter that the most of the components are "easy" to make as some haters would suggest"

Exactly.

Ramping production entails much greater investments. That's one thing I really agree with in this article. It's not like you just double cost to double production... it's a lot more expensive than that, and nintendo has always been extremely conservative business wise.

As someone in the Slashdot thread also said... Nintendo only sold 20 million or so GC's in 5 years. Do you think they really thought they'd sell that many in a year? Would the production rate of 12 million per year be reasonable given past numbers? No. It would be ridiculously optimistic. Even scarily liberal for a company like Nintendo... Yet now people are acting like they planned this all along...

BrotherNick3612d ago (Edited 3612d ago )

Notice the silence among the fanboys. This is a really well written analysis compared to articles that are against it, which don't try to justify their claims.

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