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jlauro said:

Wii sells more the first holiday season after a price drop. Why are people surprised?  and more importantly, why wasn't Nintendo prepared...

I doubt the high sales were caused by the price drop. Especially in Japan the price drop didn't have that much of an effect and sales were down YoY until Mario Bros. was released.

Iwata also said in an interview the price cut didn't have the effect they were expecting and to investors he said he was worried about the performance until December.

Most likely Nintendo just underestimated the Mario effect and thought it wouldn't push such a lot of hardware.