Nintendo: Wii shortages will last until 2008
Monday, October 1st, 2007 at 9:08am by Jack
For all of the success the Wii has wrought for Nintendo, there is one area where the machine (and Nintendo’s strategy) has been woefully inadequate: production.
And it’s going to stay that way. Today, I found an interview at GameIndusty.biz with Nintendo president Reggie Fils-Aime that all but confirms there will be massive Wii shortages this holiday season.
Lest there be any remaining doubt about that in you minds:
“We’re working very hard to make sure that consumers are satisfied this holiday, but I can’t guarantee that we’re going to meet demand. As a matter of fact, I can tell you on the record that we won’t,” he said. “What I can tell you is that typically, our inventory is lasting a day… I don’t think we will know when supply crosses with demand until after the holiday season,” he said.
This whole production thing is vexing to me. On the one hand, I know nothing about supply chain management or manufacturing. On the other I have a calender and can see it’s been almost one year since the system launched. That said, I can also see that two sure-to-be incredible games are due out for the system in November and December. But, again, it’s been a frickin’ year! See? It’s confusing. Are they squeezing the chain to put the hype train into ludicrous speed, or have they fumbled the ball with poor facilities and management? Either way, Nintendo has had plenty of time to iron this out in time for the second holiday season. Right, or wrong?
October 1st, 2007 at 9:15 am
For a very long time, I refused to believe that Nintendo was intentionally holding back systems to generate buzz, but 11 months after launch, I’m more or less convinced that this is what they’re doing. I’m thinking the “shortage” will continue until Nintendo sees sales start to die down, and then they’re going to release the floodgates and send out a press release saying that they’ve managed to triple production or something.
October 1st, 2007 at 9:55 am
They probably want to avoid ramping up production only to scale it back when things slow down. While they could sell more, they aren’t really losing customers either because people are waiting.
October 1st, 2007 at 10:45 am
I disagree that they are artificially limiting supply. There is no reason to prevent manufactured systems from hitting the market… but at the same time, there is little reason to increase rate of production given that they are already the market leader while PS3/360 sales continue to lag.
Remember that Nintendo is making a profit off of each console sold. To maximize profit, they will want to sell as many Wii systems as possible without dropping the price, while delaying manufacturing costs by not allowing supply to exceed demand. Short supply hasn’t reduced the demand for Wii systems (in fact, it continues to provide free buzz) and their “competition” doesn’t even target the same market in many cases. Remind me again what the benefits of ramping up production would be?
October 1st, 2007 at 10:51 am
“(in fact, it continues to provide free buzz)”
This, in a crux, is my argument. As long as the Wii is hard to get ahold of, it still has that elusive “it” factor that separates it from other gaming consoles. Nintendo probably has no desire to lose this by ramping up supply when they’re still selling like mad. It’s a very very burry line, but they are walking it as well as I’ve ever seen anyone walk it.
And I guess when I say “holding back supply”, I don’t mean sitting on a warehouse of Wiis, I just mean they’re not pushing their suppliers as hard as they could be.
October 1st, 2007 at 11:20 am
On the contrary Drew I’ve heard that Nintendo has a big warehouse filled to the top with Wii systems and everyday Iwata and Miyamoto take a swim through the boxes much like Scrouge McDuck does in DuckTales….
I do sometimes wonder though if Nintendo could be pushing their system more. I guess we will never know for sure but one can’t help but be suspicious.
October 1st, 2007 at 11:24 am
Haha, brilliant imagery, Bob.
October 1st, 2007 at 1:13 pm
i really don’t think that they are holding back wii’s. you have to realize that they are expecting demand to go up extremely significantly this christmas season, considering that we’ve got mario galaxy and SSBB coming out this fall. Those two games are system sellers. I really feel like this statement is pure marketing. There will be many more Wii’s in stock but he’s claiming that people will still buy all of them to the extent that they will still be hard to find.
October 1st, 2007 at 6:54 pm
Without going into an economics lesson, take 2 things into account. 1) It takes tens and hundreds of millions of dollars to open new manufacturing facilities, and outsourcing is expensive too. 2) You can only ramp up production so much before you’re pumping tons of money and getting very little in return. There’s a balance that is dictated by economic ratios and charts.
Even if you pour money into option #1, it’ll take about a year before production really starts to get going. So it they did this last fall the extra units will only be coming now for the holidays.
October 1st, 2007 at 9:52 pm
I saw a guy buying Wii tonight at Target. There were two or three more inside the glass case when I looked. Should I have bought them for Ebay?
October 2nd, 2007 at 4:43 am
Looking at my red/black ds which as a cheaper screen than my white ds lite, the slow production seems to be very true. Nintnedo never expected to have a console sell this much. I believe they could have big enough production for the DS since they used the same thing for their gameboy for a couple decades, but the console factories seem to not be able to have any more strain to keep high quality hardware, something Nintendo has done since the game & watch. and they are lowering supply in Japan since the big fight will take place in America, where the coin is still in the air, and sales are just ramping up in a few weeks.