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Sure they could easily be making a lot more Wiis/profit.

Generally high demand is good but here with its consistant short supply there will definitely be people going for the 360/PS3 just because its in stock.

Nintendo have played it too safe. The console makes them money straight off the bat (360/PS3 still sold at a loss). Production rates are conservative, even the increase is limited. Both Wii and the DS are huge sellers and could do with a big increase in production especially this time of year!!