Well, obviously. George Harrison, Nintendo's senior VP of marketing and corporate communications, has rubbished a claim that Nintendo is intentionally constricting Wii supplies in order to bolster their next fiscal year, beginning April 1. This comes in response to Gamestop's chief operating officer, Dan DeMatteo, who opined yesterday that Nintendo had "intentionally dried up supply because they made their numbers for the year." "No, that's not at all the case," says Harrison in a phone call to Next Generation. The Nintendo executive goes on to explain that it's simply a matter of competition amongst Wii territories, with Japan and Europe being just as desperate for stock. "People in Japan at NCL [Nintendo Co. Ltd.] are making the best decisions that they can about which products get shipped to which market and when." Of course, whether or not said decisions are "best" for consumers or for Nintendo's financial records is up for debate.
The argument against managed scarcity has always been that making more consoles means making more money (duh!), though this critically underestimates the value of "buzz" and the strange culture that has formed around supposedly scarce items. Already, there's an impression among many that the European PS3 launch was a "failure", simply because the system failed to sell out and attain a level of unattainability. Increasing supply may net Nintendo more profits in the short run, but what sort of gain can you associate with being in the headlines? The Wii has already snagged two headlines in the last two days because it's notably in short supply, not because it's readily available and doing well.
Managed scarcity does also not mean drying up the supply completely. Nintendo can sell a boatload of Wii's while still stopping short of satisfying demand and losing that hard-to-find status. If the company does decide to open the floodgates next month, they'll have lost nothing -- and the NPD sales results will show as much. Until then, just keep on asking for that Wii, implies Harrison. "Every retailer would want to have more [Wiis]. I think [DeMatteo's comments] may have been GameStop's way of trying to request more."




















(Page 1) Reader Comments
I can name at least two people who bought a Wii simply becuase they heard how hard it was to find, happened to be in the right place at the right time, and bought one. They really didn't have a whole lot of interest in gaming before the Wii, and I'm not sure it can really be said that they have a much stronger interest now. They certainly aren't looking into upcoming games or paying attention to the industry.
I guess it could be said they bought a Wii because they heard they couldn't, so to speak. Would the Wii have the same buzz if they were shipping twice as many?
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ps. good write up by Ludwig...
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On topic, I believe Nintendo. If people want to buy your product, you sure as hell better do all you can to make sure it's there.
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And yet another corporate feud in the making: Nintendo vs. Gamestop.
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I just started a new role (for Coca-Cola) which I have to decide, based on availability and demand which state gets what (and this is in Australia, we don't have heaps of states/population like the US). It's hard.
So I can only imagine what the person is thinking right now trying to get as many units to as many states as possible, based on demand. Poor bugger.
Or summed up in Aussie-Speak. Streuth, that sheila must be feeling like a shrimp on the barby! Crikey, that kookaburra is taking off with my jumbuck!
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PS3 has the cell processor as well as blueray components, that's a legitimate explanation for any hardware delays. Nintendo is shipping, literally, a glorified gamecube..which in it's own right was never an incredible technological leap in innovation to begin with relative to the PS1 or dreamcast.
This isn't Nokia we are talking about, or 3D0.. Nintendo has been doing this a long long time.
They have always been a flashy company, the type of company that has gone to great lengths to foster a fervent and die hard fan base, and this sort of buzz can't be bought from any PR agency.
Trust me, all of a sudden in the near future you are going to randomly enter your local best buy to see pyramids of these things scattered everywhere.
Do I think they are holding them back? No. Do I think they are purposely not making enough? Yes.
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Nintendo said they'd ship 6 million Wiis to retailer worldwide by the end of the fiscal year...in September of 2006.
http://www.next-gen.biz/index.php?option=com_content&task=view&id=3762&Itemid=2
Nintendo has, according to sales charts, shipped (and sold) slightly over 6 million by the end of the fiscal year.
Unless Nintendo was prescient enough to know ahead of time that they'd have the best system launch ever and sell as much as their next-gen competitors combined even after Christmas, they apparently "manufactured a shortage" by producing exactly as many units as they said they'd produce before a single one ever sold.
It's rare that a company can get assaulted for dishonestly doing exactly what they said they'd do, but I guess it goes to show how strong of a position they're in.
Next up: Gamestop wonders if perhaps Koei's hiding the new, legitimately good Dynasty Warriors game from us, saying that it can't possibly be true that they're churning out crap-ass sequels until they stop selling.
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And yet another corporeal Freud in the making: Nintendo vs. GameSpot?
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Consoles are designed to sell for a four or five year period, and almost always encounter supply shortages early on. There are two big reasons; technology becomes cheaper to produce as time passes and more units are produced, and opening factories is expensive.
Suppose the worldwide demand for Wii is 30 million units in its lifetime. Why would Nintendo want to put up the cost of opening more factories and producing the units at a higher cost early in the product's lifecycle, then have the demand filled and not have any use for their factories they just paid so much to open or have someone open for them?
That would take on unnecessary costs without even getting a long-term return on them, which is just a bad business decision, especially when you consider that by producing so many units so early, they would take themselves out of headlines unnecessarily and artificially reduce their long-term demand. Supply shortages are just a result of the way the industry is structured. One would think the COO of a major player in the industry would catch on to that.
Never mind that Wii is selling faster than any other console. If Nintendo is trying to run a shortage, someone should tell them that leading the sales charts isn’t a good way to go about it. I mean, it’s worked so far I guess. But really now, if you want to run a shortage you should at least quit making and selling so damn many machines, or else people might think you are producing them and trying to sell them as much as you can.
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Executive compensation is largely based on yearly bonuses that are tied to performance during the year. Usually, there is a goal or threshold based on some performance measure, where if it is met, then it activates these bonuses. In this case, we all cannot dispute that Wii sales have exceeded all expectations. Therefore, it is reasonable to assume that bonuses have been activated for these executives for quite a while. So there is virtually no incentive for Nintendo to ramp up supply to meet demand before fiscal year-end, which by the way happens to be 3/31/07. It is MUCH more advantageous for executives to hold back this supply until the new fiscal year and therefore position themselves to meet these goals once again so they can activate these bonuses for 3/31/08.
In the world of accounting this is called a "cookie jar" and in the past 5 years, this method of "smoothing" earnings/revenue has been responsible for some of the largest corporate scandals that have been in the news.
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And yet another corporate feud in the making: Nintendo vs. Gamestop.
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Yeah, sure, it probably IS fairly simple to salvage a decent amount of the Gamecube fabrication setup, but what rate were they making GCN's for the last year?
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*Sigh*
And yet another corporate feud in the making: Nintendo vs. Gamestop.
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The door swings both ways my friends.
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The more I hear about this I think Gamestop's motto should be "We like money and we want more of it." Not that this is a surprise to anybody.
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This conspiracy doesn't hurt the consumer. This isn't DeBeers owning 90% of the diamond market to restrict the flow and increase price. This is Nintendo producing at the lowest cost at a given price.
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Let's not forget about fact that Wii at moment has very very modest collection.
Judging (claim: I'm embedded software developer) from Wii insides, I'd say that Nintendo can produce them at tens thousand quantities a day. If wanted. All components are cheap (as dirt) and readily available (as dirt) in *large* quantities. Well with exception of ATI chip - I cannot tell for that since it is specifically developed for the Wii. But then it is manufactured at 90nm process which is available for 5 years now - so finding idle production line to fill is easy I think.
But. Let's just come over to shop and see Wii game selection. Poor at best. No simple FSP yet released (I WANT MP3:C!!!). No puzzle collections. No simple arcades. And this is all what I usually play on PC and DS.
My insight would be that more Nintendo Wii would be sold - bigger (and quicker) public disappointment would materialized due to lack of games. And people buy consoles for new games. No new decent games - sales would be disappointing anyway.
I would opine that Nintendo might be holding back Wiis just to let 3rd party game developers to catch up.
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Again, if Nintendo is shipping fewer Wii units than they can make, that's shorting, even if they are still shipping a million per month worldwide.
As for the illegal comment... what laws are they breaking? Find me the law that says Nintendo must ship every single unit it produces the second it comes off the line. Believe it or not, Nintendo ould hoard all the manufactured units they wanted and the law couldn't do a thing (it's not like they've been paid for them yet). Again, how smart this move might be is another question entirely. But if they are shorting (and I believe they are), it's perfectly legal.
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(2) "Nintendo is holding back supplies but not for the reasons that everyone thinks. It is not to create false demand or buzz, although these things may be side-benefits. No, the primary reason why Nintendo is holding back supplies is because of greed, Corporate executive greed."
COMMENT:
(1) It benefits 3rd party developers (especially those who are behind) to have a bigger installed base when they finally get to their game launch. Holding stock benefits NOBODY. Sometimes, companies hold off launch DATES for developers to get ready, or to build up stock. But you DON'T HOLD BACK SUPPLY of consoles. It's nonsense.
(2) How many could you possibly think Nintendo is holding back in order to "short" the market and create buzz? Unless Nintendo is sitting on 2 million systems in warehouses, they are not creating the shortage. They could easily dump a million extra units worldwide TODAY and STILL sell out. I personally know at least 15 different people who are looking for a system.
There is absolutely no incentive to NOT get as big an installed base as possible as quickly as possible.
Achieving the most MASSIVE INSTALLED BASE POSSIBLE is the NUMBER ONE success criteria in the market (even more so for a system that sells at a profit). It's more important than buzz, more important than quality of the system, it's more important than profitabililty at this point. EXPANDING INSTALLED BASE is JOB ONE>
All other measures of success are SECONDARY and minor at this point. The sooner they pass XBox360 in lifetime sales, the more money and more chances of longevity.
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I have no idea if they are hoarding or lying or ramming pencils in their nostrils to pass the time... I'm not an insider like the rest of you seem to be (or believe what one Gamestop dude thinks... and who wants to believe them about anything anyway, in my opinion). What I do know is I have seen more non-gamers get in to and eventually BUYING a Wii than I have ever seen before. Happened in my own family with my father (never bought or played a system before the DS, funny enough), my father-in-law, sister, friends, etc. When you have more people interested in an item and so much exposure since day one in several very high profile arenas, you're BOUND to sell a few more than you would showcasing it to the hardcore only. And selling more than 5 million of them in 4 months and a few weeks, it doesn't surprise me that they are hard to get a hold of. But, then again, I don't have the info all of you seem to have either... oh well.
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They should open one in North America, when they no longer have to ship the units across the Pacific Ocean by ship, maybe GameStop will open thier eyes and see the light
And i'd bet Nintendo is doing SOMETHING to artificially inflate demand, either that or Wii really is the big revolution Nintendo made it out to be, because these sales are just too high... (as a pessimistic Nintendo fanboy, i'm waiting for the other shoe to drop, just like it always has since the N64)
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