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It's not about increasing demand, rather about keeping it level.
It seems obvious that these stockpiling theories are bunk, so what's left?
A product that is hard to get will gain a certain repute and image and demand will remain relatively high, whereas a product that is readily available and never sells out doesn't stand out compared to competition.
As it stands; we don't know Wii demand and Nintendo don't know, and I think that's how they want it and will keep it for a while.
If you can keep demand up to ensure equal levels of revenue a lot longer rather than make quick profits and saturate the market, then that's what you'll do.
Shareholders and investors are not overly fond of quick cash, it has a tendency to not last, shareholders want a steady and stable stream of income so they can plan soundly for extended periods.
How is that foolish?

Edit: ^^ who mentioned increasing demand, I never wrote that?