Stockpiling for Wii - When would You do it?

[Fastrabbit09]

if i was nintendo, i would not have been doing any stockpiling in Q4...that would show that demand exceeds 1.8mil/month, so i could feel secure upping production to 2mil/month+stockpiling needs

so 2.3mil/month would be fine even if demand happened to be only 2mil/month, as that'd leave .3mil/month, or 2.4mil extra for Xmas, which is easily justified

of course, i believe they should be more aggressive and up production to 3mil/month right away...even if they end up exceeding demand (i don't believe they would), they could always stockpile more and then have the later production models this fall be in different colors and also lower prices in order to spark more sales...i don't see a scenario where they can't consistently sell 3mil/month this year (remember they also can stuff the channel with around 1mil wiis if they overproduce as well in order to not lose so much)


u gotta look at risk:reward

if wii's demand is well over 3mil/month during non-holiday, then u gain a lot by upping it to 3mil/month now and finding out and then u can increase again instead of going slower now

if wii's demand is only around 2mil/month during non-holiday, then u overproduce by 1mil/month, but half of that can be sold during the holiday season and the rest can be a combination of new colors, channel stuffing, china/india/new markets, price break, bundling

so ur risk isn't too high unless u have to enter a 3+year agreement for 3mil/month production

but they use multiple factories, so one of their other factories' contracts should be up sooner anyway (again, don't know the terms they work with)

so bottom line: as long as they can enter into a deal that can be cheaply ended within 1-2 years, then there isn't much reason to not up production a little more aggressively to be close to the 3mil/month range this spring