Nintendo won't hit their forecasts. How did they get them so wrong?

[Asriel]

I'd assume they didn't adjust them last quarter because it would impact market confidence going into the Christmas sales season. There was enough negative news surrounding Nintendo without them adding to it. I get the feeling they know they'll need damage limitation and are preparing for Iwata to step aside at the end of their financial year (falling on his sword for missed targets), with someone replacing him as Nintendo Japan and Global President, while Iwata moves to Nintendo America to resume the role he took last year. Whoever takes the global role can then say that he'll adjust sales expectations more in line with market reality.

EDIT: To more directly answer the poll, I think it's a combination. I think the initial numbers were misguided by optimism--an optimistic assumption that the products Nintendo had prepared, despite being very different from the products that sold Wii/DS so well in a radically different market, would perform far more strongly than they were actually likely too. I also agree with others than the higher estimates were due to not wanting to undersell their products in terms of market confidence, but I think Nintendo stuck to their estimates (even when it became obvious they couldn't hit them) to avoid damaging market confidence during the crucial year end sales season, as I outlined above.