Nintendo will not make enough of its Wii game consoles to meet holiday demand. That may help sales of the Microsoft (NYSE: MSFT) Xbox 360 and Sony (NYSE: SNE) PS3.
The Wall Street Journal argues that because Nintendo started as a small family business and has had its share of ups and downs, it is inclined to take very little risk with inventory. That can cause it to miss a big up-tick in demand. The paper writes, "Because Nintendo puts a great deal of focus on cash flow, it tries to keep its inventory as low as possible. Such a strategy is rare among Japanese companies, which have tended to focus on revenue growth and market share."
Nintendo says it was just caught short and did not foresee the big demand for the Wii.
Some experts and observers, however, think that the Nintendo Wii shortage may be by design. Having customers looking all over town for a hot product may build a sense that it is a "must have" item.
The idea that the shortage is by design is probably right. Wall Street would have to assume that Nintendo was very poorly run if it was actually caught so short on the availability of its most important product. The Wii outsells PS3 and Xbox 360 by such a large margin that giving up a couple of share points may not hurt, if the company has a plan for next year.
In 2008, Nintendo plans a number of new upgrades to the Wii, and several games for the platform will come to market. Having customers waiting for the Wii may not be a bad idea.
Douglas A. McIntyre is an editor at 247wallst.com.











Reader Comments (Page 1 of 3)
2-04-2008 @ 4:23PM
Know nothing about business or games said...
Stalin and Robert,
The planned "shortage" issue is likely correct; read Brandenbuger and Nalebuff's book "Co-opetition" for a description of some of Nintendo's early business practices when they had a stranglehold on the videogame industry--pretty illuminating. A key quote is, "That's why Nintendo did so well: while a monopoly itself is nice, monopoly and shortage is twice as nice."
Yes, there are other game consoles now. But currently Nintendo is in the driver's seat on the new Wii-style paradigm. It's deja vu all over again.
2-24-2008 @ 10:52PM
Studb said...
Freaking pisses me off the way Nintendo runs their business. What pisses me off more is how greedy ***holes buy up all the consoles and sell them for twice~ten times the original price on Ebay.
12-07-2007 @ 9:57AM
Derric said...
Elves aren't throwing Wiis together in some magical workshop. Nintendo is putting out 1.8 million Wiis worldwide on a monthly basis, and they still can't keep up with demand. If producing and selling 1.8 million a month is purposely creating hype by holding back, then Nintendo must be doing something right.
12-07-2007 @ 11:06AM
Stalin said...
The previous post is right. The demand for the Wii is unprecedented. Stick to analyzing markets like chemical companies and electric shavers, because I've noticed 99% of you business analysts are horribly out of your league when it comes to figuring out the video game industry.
If any of you knew anything about video games you would have invested back when Nintendo announced the controller. Anyone with money did on some video game sites and guys made a metric ton of cash.
They had to actually pull ads (yes, pull ads) because they can't meet demand in spite of producing 1.8 million consoles a month. That's almost more than both of their competitors combined. The only loser in this equation is Nintendo, and everyone knows it--including Nintendo. They want to bring gaming to everyone and it can't be done yet because casual gamers are not getting up at 4 am to buy the system.
Not a rabid fanboy or anything like that. Just someone who knows this particular market (video game junkies know their market well). The average 15 year old knows more than any Wall Street suit will ever know about the VG industry.
Just ask Josh Larson :O
Sorry to sound so out of joint about this, but Wall Street needs to hire some Mountain Dew Game Fueled freaks who play video games like 12 hours a day and spend the other 4 waking hours on video game sites gobbling up video game information.
12-09-2007 @ 12:46AM
axt113 said...
Anyone who thinks Nintendo is doing it on pUrpose needs to go look up the concept of Monopolistic competition, and realize this shortage is costing them mad profits
12-09-2007 @ 8:12PM
issamohsen said...
i have the wii and i am loving it
12-09-2007 @ 8:15PM
Shelley said...
I was in New York last weekend at Nintendo World and they said that they get 200 Wii's a day,and that they are sold out in about an hour! The line apparently starts at about 1am every single day. I am so glad that I got one in June for my daughter because I would hate to be looking for one right now!!!!
12-09-2007 @ 8:18PM
charles Forsher said...
I AGREE
12-09-2007 @ 8:18PM
charles Forsher said...
I AGREE
12-10-2007 @ 11:10PM
Will said...
Hey Charles? Lay off the Caps Lock key.
12-09-2007 @ 8:17PM
jim said...
I love my Wii, mostly because it isn't mind numbing like the other consoles. You actually have to go through the motions. Not just pushing minds.
12-09-2007 @ 8:39PM
Erich said...
Look, I've been living in Japan for the last 5 years and you can find a Wii anywhere. In fact, you can pick up a PS3 or a Wii at a 7-11 for crying out loud!!! No XBOX360's though.... that's not Japanese, hence, well you figure it out. The point is, they don't really care about the US market share. Yeah, it's important, but it's much more important for them to be available and popular in Japan than overseas. The really weird thing is the Nintendo DS is amazingly popular here and it's hard to find the Japanese version of the game, but it's easy to find the US version, which also happens to be cheaper. Here's where it get's really weird: the language can be easily changed to Japanese on the US version AND the games are compatible with both models BUT the Japanese don't believe it and the retailers don't pitch that to customers.
12-09-2007 @ 9:44PM
legiaking16 said...
I dont really care that Ninendo is holding back maybe its losing money but its smart
I own a wii and I would love to see why are they holding back cause many of us will benifit
12-09-2007 @ 8:52PM
splotch said...
When a big game is going to debut (for example the wii), the makers (Nintendo) will purposely over-advertise and only make enough for a few people to get it. This is so it will be more popular, and by Christmas, there should be enough for everyone and they will have many special deals, thus, creating more publicity. The Wii is all about publicity and advertising.
12-09-2007 @ 9:02PM
lisa said...
I caught on the the idea and wanted one. For a month or two in Spte/Oct I stopped by best buy and sams each week .... no such luck. Last time Sam's had some card boards finally out. I got excited only to find sign saying they really didn't have them. Fed up.... I am so over wanting one that I don't intend on getting one anyone. The IMPLUSE to must having one ..... is gone.
12-09-2007 @ 9:18PM
Pam said...
I have said no to other game systems because I didn't want my kids to sit there on the couch, oblivious to the rest of the world and just SITTING. I have held firm on this for several years. They will probably both fall over from shock when they found out I got them a Wii for Christmas -- but it is a game system that finally meets my requirements. If it gets their butts off the couch for the rest of the winter, I will be thrilled.
12-09-2007 @ 10:14PM
Dana said...
Good for you! My daughter got a Wii last Christmas and it has gotten me off my hiney to play. It is a wonderful gaming system.
12-10-2007 @ 7:00PM
Nancy said...
I am so glad I was never suckered into this garbage for my kids, I never waited in lines for cabbage patch, furbys, tickle me elmo and I would never stand in line for some over priced video system, anybody that does is a total fool in my opinion.
12-09-2007 @ 9:30PM
rob said...
of course its by design they are using old tech its graphics are actually below the gamecube 6 yrs old now i think its just a motion sensing gimmick what games are worth buying on that system that i havent played on another ? carnival games lmao there are 3 that an actual gamer migt by not your grandmother that console is garbage in time all of you will see you wasted your cash
12-10-2007 @ 11:12PM
Will said...
It's graphics are not BELOW the GameCube. Not that they're much better, but not BELOW. And that's a video game pet peeve of mine when people talk about "the graphics". They're "entertainment" systems, people, not "look at the pretty animation" systems!
I personally think the Wii is much better than other systems, because it actually involves some work. Yes, I did say 'work'.