Bruce Blog: Wii will see a price cut....

[famousringo]

Sqrl said:
Please add this text to the original post so we don't have to give him hits:

It is looking more and more like Nintendo (NTDOY.PK) may have no option to make the Wii cheaper at retail, despite what Satoru Iwata says. Here’s why:

1. It has been at the same price for a long time now, during which it has become a lot cheaper to manufacture, especially with the volumes being churned out. Nintendo has been making a profit in every unit from the beginning, so there is plenty of room to drop the price.
2. The company is ramping up production to 25 million units a year. Initially these will just meet the backlog of demand, but once that is done it will need to use the price mechanism to shift them.
3. Nintendo's release schedule is looking very weak. Right now we have Super Smash Bros, Brawl, Mario Kart and Wii Fit. Then nothing mega and lots of shovel ware. Compare that with the PS3 and 360.
4. GTA IV. This is going to transform the balance in the market strongly in favour of the HD consoles. The Wii is going to look increasingly last gen.
5. To make the most money out of the Wii back catalogue of games, Nintendo needs as many platforms out there as possible. At a lower price it will sell more Wiis and milk it on the software.
6. The Microsoft Xbox 360 price cuts now make the Wii look very expensive. You get a whole lot more for your money with the 360.

So when is this going to happen? Q3 of 2008 is my best bet. But it could be a little later, depending on what the market tells Nintendo.

So in the first place he gives Iwata crap for saying no price cuts this year then he admits it could be more than a year in his conclusion? What a piece of work.

PS - lmao @ the "Well once [game] is released the Wii has nothing to look forward to!" argument. So classic.

Thanks for posting this Sqrl. 

What blows my mind is how some points are bang on, just misinterpreted with so much wishful thinking. I've numbered them for easy rebuttal. 

1. This is certainly true. Nintendo has plenty of room for a price drop.

2. The problem with this is that they're ramping up production over the summer. Most of these added units won't go directly to store shelves, they'll be stockpiled so that Nintendo can actually meet, or at least come closer to meeting, holiday demand. If they need to cut price to move those 25 million per month, they'll do it in the new year, not this year. Just like Iwata says.

3. Another person who isn't paying attention and doesn't realize that there will be at least 3 sizable new first party games scheduled for Wii in between E3 and Christmas. I believe the memo said Disaster, Kirby, and Animal Crossing, but one of them might get delayed, we are talking about Nintendo here.

 4. Ummm, no. Halo 3 didn't even make Wii blink. 360's parade of AAA megahits in 2007 didn't slow it down at all. GTA is the biggest yet, and will be a surge for HD consoles, but Wii won't even notice. Wishful thinking that fanboys get to recycle for every major HD release.

5. This is predicated on the assumption that Nintendo won't sell all the units it can manufacture. I re-affirm that Nintendo will sell all of their increased production over the holidays. 

6. The marketplace does not agree with you, or 360 wouldn't be selling in last place now. They aren't your clones, and they have their own ideas about the value represented by the Wii and the 360. The best way to be a terrible analyst is to assume that everybody thinks the way you do.