Nintendo Sandbagging the Wii

[bdbdbd]

Smash_Brother said:
I have a girlfriend who has done the retail thing for 7 years, and she observed this...

When a product is available in every shop on every corner everywhere, demand generally falls, but when the supply is just barely below demand, it keeps the demand coming.

Basically, keeping something as the "hot item" has a viral effect: people wanting it stirs other people into wanting it. Like I said, though, if you could get it anywhere, it just wouldn't have the same effect.

Now, I'm not accusing Nintendo of anything here, as I'm readily willing to believe that demand is much higher than supply, but it will benefit them greatly if supply continued to be just below demand.

So, what happens when supply meets demand? Will demand decline before sufficient supply or will supply ramp up and sales with it? Or will supply ramp up and sales decline? Lets say we have a store a and store b. They both are out of supply for x. There's 2 customers, y and z, daily asking for it. Y goes to a asking x, a don't have it, y goes to b and ask for x, b doesn't have it. Z goes a asking for x, and when they don't have it, z goes to b to ask x. So the demand is 2 on day on, but both stores have demand of 2, which would equal 4. The next day same happens, only this time there' z,y,g and h. Demand is 4 on day two, and each store has demand of 4. Day 3, six guys, with each store having demand of 6. Day 4, 8. Day 5, 10. Day six, both strores get a supply of 10, and they only sell 12 combined. Day seven both stores sell one x each, just like day 8. And day nine, they get new shipment. So, the demand dropped, when x wasn't supply constrained anymore. Right? Virtually yes, in reality no. The demand actually remained stagnant, only that after supply was enough, people weren't running between stores asking x. @Topic: Wii was originally planned to be manufactured 500k a month. After E3 06, Nintendo started to work to increase production to 1M a month. Production was ramped to 1,3M a month in march and was planned to be increased to 1,8M a month in june, but supplier couldn't manufacture enough certain components, so it was delayed a couple of months. I believe that if Nintendo would have managed to ramp up the production in june, we may have had seen 2M+ production rate in october at latest. We will see Wii production ramped to 2,2-2,3M before the end of this FY. And the supply chain management isn't easy. And since Wii uses a lot of custom hardware, it's even harder than using bulk parts. Although Wii isn't as powerful as 360 or PS3, it doesn't mean that Wii wouldn't use new tech. And besides, what matters the most, is that will it use custom or bulk parts. I can assure you, that PS3:s production is much easier to ramp up than Wiis.