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.
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Reader Comments (Page 3 of 3)
12-09-2007 @ 11:56PM
steve said...
Yeah this is wrong. Nintendo isn't doing it on purpose. There are two reasons for the shortage. One is that the recent failures of Nintendo has caused the company to shrink smaller and be more careful. Second is that they have it a much more demographics than anticipated. Who would have thought that this would be a hit with adults as much as it has with children. Working at Bestbuy, I have told so many people no that I can tell you that Nintendo would have to increase production by factor of 20 to meet current demand. Why would a company kill its bottom line on purpose? Everytime a person is denied a Wii, Nintendo is denied profits on all their high margin items, like accessories.
12-10-2007 @ 12:07AM
Jason said...
Nintendo has a shortage because they don't mass-market like Sony and Microsoft do, that's always been Nintendo's mantra. Microsoft is all about 'lots of low-quality crap b/c people like electronics, good or not' and Sony is all about 'high performance, but little lasting appeal.' Nintendo is slow, but sure (usually).
Nintendo has its own mistakes in catering to kids though, trying to focus too much on non-gaming groups (the problem parents, is not 'games teaching kids to shoot everything,' the problem is you're letting games teach your kids their ABC's). When I was a kid, we had fun, challenging games like Super Mario Bros. and Donkey Kong; now it's Mary Kate and Ashley's Adventures in Math or some crap.
And any parent who buys their kid all three video game systems deserves whatever trouble their punk gets into.
12-10-2007 @ 12:27AM
Sherry said...
My son tried to buy the Wii for his boys for Christmas in Colorado but couldn't find so asked me to look for one out here in Nev. I checked every store, none available either in store or on line. The only ones available are those who buy them up and then scalp them. The prices I saw for those were crazy. Why would I pay $500 to $600 to possibly scam artist. The kids can wait, sure a dissapointment but if new and better one coming out later it will be worth it.
12-10-2007 @ 12:26AM
mike said...
Maybe sony or microsoft should make their own versions of the wii.
12-10-2007 @ 12:46AM
Joseph Leslie said...
They are HEARTLESS BASTARDS at NINTENDO! I hope that their evil strategy cafches up to the and everyone buys something else! My KIDS are crying because I can't get a Wii!
12-10-2007 @ 12:56AM
tee tee said...
I think it is good that they are taking as much time as they do in making the wii that is why they don't have any problems unlike microsoft with the xbox 360 they rushed them out and they don't work microsoft could learn a thing or two fron nintendo!! I have never had a problem with anything from nintendo and I have own them all from the beginning keep up the good work nintendo!!!
12-10-2007 @ 12:59AM
mousefiend said...
i wouldnt buy a wii again.. mine broke after 3 uses... wont read the disk!!! waste of money
12-10-2007 @ 1:10AM
Wii is JUNK said...
It boogles the mind people are actually buying this piece of junk. Inferior graphics crappy sound little or no internet play, very dated titles, I mean seriously Mario Brothers is so last millenia. How much more can they milk it for? go ahead waste your cash on a system that only a few companies are bothering with making titles for. you are far better off with either a PS 3 or XBox360 if a console that is limeted to TV resolution is your bag.
Sorry folks HDTV is still crappy compared to PC and Mac resolutions
12-10-2007 @ 1:12AM
LuckyDuck! said...
We got a Wii last year for Christmas and it has gotten my kids off their butts for an entire year now and I lost 20 lbs. just from playing Wii tennis and boxing. It is awesome and was worth every penny, not to mention having to camp out in mid-December to get it. I'm in my mid-40's and not a gamer by any means. I was a wiz at PacMan and Tempest back in the day and those games are kiddie play compared to the stuff today, so the Wii is perfect for someone like me!
12-10-2007 @ 1:15AM
monster said...
Wii - would like to play..........with your mind.
12-10-2007 @ 1:27AM
debra said...
My 10 year old daughter wanted one for this christmas but i have had no luck finding one are getting to a store on time when they get a few in.I just told her wait after the holiday is over maybe we could get one in the springtime.Iv'e look online but even ebay seems to want to much.
12-10-2007 @ 2:34AM
jayc said...
I am buying Atari Pong for my kids and they will love it.
12-10-2007 @ 2:53AM
Debbie said...
Funny when the original Nintendo came out you could almost place a very large bet that the most popular games would not be available. Partly by design and also the company would throw a box together and you got what you got. They didn't allow you to pick the games you knew would sell in your area. Too bad was their attitude. Seems like they are up to their old tricks...
12-10-2007 @ 3:15AM
ed said...
I dont know why nintendo keeps advertising on tv the wii, hell u cant even find one anyway i have been probably to every store in southern california & nothing I guess my son will never ever see one Merry X-mas to all of u that have one!!!!!
12-10-2007 @ 5:26AM
Marlene said...
im tired of worrying about this gaming system..... for me im disappointed but done.... i can't stand in lines for hours on end to get this so im choosing to just give it up.
12-10-2007 @ 5:54AM
Marlene said...
I'm 68 years old and wanted a WII the first time I saw it advertised. I wanted it for myself and for my grandchildren. It gets you up and moving and gets the kids actually doing some excercise! Bowling and tennis are two games you can play when arthritic joints don't allow it at an alley or tennis court. All senior homes should have one. There are WII clubs where we live and the people have a great time playing and competing!
12-10-2007 @ 9:03AM
Robert said...
Stalin, it's refreshing to see someone so green and naive in this day of cynicism. If you had a better understanding of marketing you'd realize how this shortage benefits Nintendo. By creating a 'shortage', and the massive publicity as a consequence, the word is out to people who otherwise would have no idea that there was such a thing as a Wii. You can't even buy that type of publicity, so although it may seem like a rather expensive move on Nintendo's part, it's actually a strategy that works over and over and over again. Think of the money they've lost in fewer sales as advertising dollars - pretty cheap advertising dollars at that! Do you remember a holiday in the past 30 years that there hasn't been a massive shortage and hysteria about a shortage of something, anything, at Christmas time? Remember Cabbage Patch Kids?
12-10-2007 @ 2:11PM
kt said...
We got a Wii by sheer luck. We walked into a game store in Georgia and out of habit asked the clerks if they had any in stock. To our surprise, someone had just dropped on off about an hour before and they had just finished checking it to make sure it worked. We've had it for about six months now and love it!
12-11-2007 @ 4:23AM
rob said...
it might not be below it but resident evil 4 on the gcube looks far better on that than the wii and for all you with your getting up and moving stuff go excercise or something this isnt for that lol and it might be a cool idea if the thing wasnt so gimmicky with its controls i had a wii for a week lol the money went to a better system and graphics are a big thing eould you rather play on nes pr ps3?
12-19-2007 @ 7:58AM
momof3 said...
I love the "my kids are going to have a bad Christmas because I couldn't get them a Wii" and the "I've looked everywhere but couldn't find one" comments. I got mine in January, been a huge Nintendo fan since forever - love Zelda games - and have a 64 and a Gamecube still up and running at my house. I think this is the best system out there - i have a PS2, no want to get a PS3 or a 360 - I think they are overpriced pieces of junk. In order to get one you need to be more vigilant - my husband got one a few weeks ago for his sister by getting up early and waiting in line for 2 hours. He said that people were about to come to blows over it! I wonder if these people that spoil their children that much that they get them everything they ask for realize that all they are doing is hurting their children in the future. It's life, it's capitalism, and it's never going to end - get over it.