NeoGAF

http://business.timesonline.co.uk/to...cle3062612.ece

Nintendo is set to miss out on an estimated $1.3 billion (£650 million) in sales this Christmas by failing to meet soaring global demand for its Wii video games console.

James Lin, a senior analyst at MDB Capital Group, which monitors retail activity, said Nintendo could sell twice the 1.8 million Wii consoles it is manufacturing each month. “There are as many people who want a Wii but end up walking away empty handed as there are get one,” he said.

Production has been constrained by shortages of components from suppliers and Nintendo insists it is doing all it can to meet demand. But analysts believe the company privately welcomes tight Wii supplies as it wants to delay the moment of market saturation to prolong interest in the console.

Consumers also have their suspicions. A proliferation of online conspiracy theories recently forced Reggie Fils-Aime, the president of Nintendo’s US operation, to deny suggestions that there was a “secret plan to store Wiis in a warehouse to spur demand”.

Mr Lin said: “It's a difficult balance, but at this stage, shortages are not the worse thing”. The Wii is one year into a lifespan expected to last between four and six years.

Nintendo has raised production targets several times in recent months and now plans to ship 17.5 million units globally this year, up from 14 million. It says that demand for the Wii "has been higher than we could ever have anticipated".

Piers Harding-Rolls, an analyst for the market researcher Screen Digest, said: “There has probably been a certain amount of supply-chain mismanagement. But Nintendo could not have predicted the level of demand.

He added that the shortages are also “a function of Nintendo’s 'just-in-time' supply chain,” which keeps inventories down to a minimum and is proving hugely profitable.”

Built to appeal to "non-core gamers" -- women and older people hitherto ignored by the games industry -- the Wii has outsold Sony's PlayStation 3 and Microsoft's Xbox 360 each by more than 2-1 this year.

Stock market investors appear to believe that Nintendo can maintain its success. Over the last two years the group’s shares have risen five-fold, to make the company Japan’s third most valuable quoted business.

Boy, they'll miss that.

I got mine. :D

Oh well. It'll be fine once the fad is over.

Isn't this the same argument that record companies give all the time about lost potential sales due to MP3 copying? Or am I misreading something here?

I'm guessing we'll see many more of these articles over the next week. Probably with the same quotes.

1.3 billion is peanuts for them.

Originally Posted by XiaNaphryz

Isn't this the same argument that record companies give all the time about lost potential sales due to MP3 copying? Or am I misreading something here?

Uh, no. If I download an album, it means I want the album, but I'm not paying for it, hence the record company just lost $15.

In this case, Nintendo is missing out because the more they produce the more money they make, but are missing out on money because people want their item but alas cannot buy it

Nintendo to buy Sony in five years.

money on the table

bu bu bu bu artificial shortages!

I'd imagine the opportunity cost of missing out on those potential sales leaves them better off than spending money on increasing production anyways, so they aren't really losing anything

Most common answer heard by a Gamestop employee answering the phone


"No, we don't."

I have a feeling that Nintendo will still do just fine.

$1.3 billion is what, 1/5 of their cash reserves, and they're still selling every single unit they produce? I'm sure they're crying and curling up with their money printing machines at night, drinking themselves into a stupor.

It won't cost them $1.3billion, they'll lose $1.3billion in sales.

It costs money to produce all those Wiis so while they might lose $1.3billion in sales it will probably only cost them a couple of hundred million in profit.

I'm sure they've lost more money in the back of sofas.

Iwata will lose a few inches in his pool of money and gold coins, shame.

Wasn't this posted in the NY Times article last week?

I think we should all open donate to a Paypal account so we can help them through this hard time...

Nintendo needs to learn how to better manage their finances.

The numbers/methodolgy they would use to determine this number would be highly suspect.

It's almost impossible to predict sales of product on hand .. then you are going to produce an accurate number for imaginary sales?

Poor Nintendo. At least Sony keeps up with demand.

You never lost something you never had. Even "could have" doesn't make it a lost.

Originally Posted by perfectchaos007

Poor Nintendo. At least Sony keeps up with demand.

You gotta be kidding, the PS3 was supply constrained for half the year! According to Sony...

As much as I regretted slapping down the plastic when I bought my Wii, I really can't say that I regret buying my Wii.

This assumes that Nintendo will only have 1.8 million worldwide Wii's available during the Xmas 2007 seasons. My suspicions are that they'rell magically have more than that.

well, I think this is what "marlo" would call "one of those good problems"

I'm sure they've been stocking 100k or more a month for December.. that's IF they were smart..

Originally Posted by MrPonx

I'm sure they've been stocking 100k or more a month for December.. that's IF they were smart..

Outside of America, it is possible for them to appear that they're selling more than their making as many folks are reporting that they'd be more readilly available than in the US.

But...

Inside the US, they've been fairly well non-existant beyond a couple hours every time a store gets restocked....for months, if not a full year. So, as a result, for NPD folks to release December's #'s in January and if it shows anything greater than 2 million Wii's sold, then it's safe to say that Nintendo was rigging US shipments. I for one, expect and EASY supassing of the 2 million figure and wouldn't be surprised if somehow "magically" 3 million Wii's were sold.

But hey, if I'm wrong, I'm wrong. I won't deny the fact that I've been wrong in the past and will fess up to it.

But man...my spiderbullshitsense is tingling here...like a dogs nose in a cocaine distribution warehouse.

Originally Posted by Firestorm

Oh well. It'll be fine once the fad is over.

I was waiting for a post like that. :lol Good job.

Originally Posted by MrPonx

I'm sure they've been stocking 100k or more a month for December.. that's IF they were smart..

If they were smart, they would have made the Wii HD and was more like 2 360s duct taped together instead of their Gamecube 1.0005 or whatever it is and made Super Mario Galaxy a 2D platformer instead of it being like Bubsy 3D part 2, made Brain Training freeware, Zelda with voice acting, & Super Smash Bros Brawl an actual fighting game.

wink emotioncon

Originally Posted by DarthWaiter

Uh, no. If I download an album, it means I want the album, but I'm not paying for it, hence the record company just lost $15.

In this case, Nintendo is missing out because the more they produce the more money they make, but are missing out on money because people want their item but alas cannot buy it

Sigh... Someone failed to understand this post, so I'm compelled to explain.

Just because you downloaded the album, doesn't mean you wanted it enough to spend $15 on it, you might have just grabbed it because it was... FREE! Hence, the logic for having "lost" $15 is not really correct, only a small percentage of people that pirate stuff would have spent money on it anyway.

Kind of the same for this situation... Will these people really NOT ever buy a Wii, just because they can't get it this Christmas?

This kind of article just shows that journalism degrees don't require you to take any business classes. Either that, or they did take those classes, and realize that sensationalism sells... depends on how much credit you give the reporters, I suppose.

What a poorly written article.

So basically, they're saying the Wii could have sold 4 million more units in November/December.

Ouch. But how many of those people are actually lost? What percentage of them will just wait and buy it when its available vs those that never get it.

Originally Posted by ToxicAdam

The numbers/methodolgy they would use to determine this number would be highly suspect.

It's almost impossible to predict sales of product on hand .. then you are going to produce an accurate number for imaginary sales?

I'm sorry, the headline "Nintendo may or may not be missing an opportunity, we don't really know" was submitted, but rejected at the final moment for this much more interesting one.

Originally Posted by Fixed2BeBroken

well, I think this is what "marlo" would call "one of those good problems"

Flawless, my friend.

Oh damn, so the article is titled that as well? I thought that was a mistake on the OP's behalf.

I wouldn't go so far as to say the article was "poorly written", that's just a glaring fault in logic, since it's not "costing" them anything, just more potential profit they are not getting.


...for once, I REALLY cant wait to see that updated financials thing at the end of March. I bet the working profits thingy is positively through the roof.

Originally Posted by heliosRAzi

Nintendo needs to learn how to better manage their finances.

You're absolutely right. They could be printing money at a much faster rate then they are now.

Well at least their lucky dime is safe.

The online "rumor" came directly from Reggie's mouth.

LOLZ this is a sad version of NINTENDO IZ DOOMEDDD!!

Originally Posted by heliosRAzi

Nintendo needs to learn how to better manage their finances.

:lol

When it says "cost" it can sound like this is money Nintendo have to pay :P Still they have a huge profit even if they miss out on $1.3 billion. Wii and DS :)

Originally Posted by Bildi

It won't cost them $1.3billion, they'll lose $1.3billion in sales.

It costs money to produce all those Wiis so while they might lose $1.3billion in sales it will probably only cost them a couple of hundred million in profit.

I'm sure they've lost more money in the back of sofas.

+1

Also, Nintendo's reasoning, as had been stated, before, is that they don't want to build new fabs, only to have demand taper off. It would be great at first, but it's expensive to have a fab running below capacity. The text in the OP hits directly upon this. It talks about lost revenue in the SHORT TERM. Nintendo thinks ahead, and it seems to be working for them.

Alot of persons are taking the term "cost" too literally. If you think of it as opportunity cost, or the sales that they are missing had demand been sufficiently met with supply, then it becomes more tangible. I do agree though that this is only affecting Nintendo in the short-run, as their long-term sales assumptions have undoubtedly been changed due to this holiday.

if this is just wii sales without software, that would be 520000 wiis

Wii Fit + Smash Bros. will make sure that all people who can't give money to Nintendo now will give it next year...

Nintendo needs to summon more dark gods that specialise in production and delivery management.

So, what are the odds on the Wii being the 'Tickle me Elmo' for three years straight?

Originally Posted by ghst

So, what are the odds on the Wii being the 'Tickle me Elmo' for three years straight?

Depends on what is coming during the Winter. I hope WiiMusic is the flagship title for the winter in which it is like Nintendo's answer to Guitar Hero but it can be played by anybody.