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Forums - Nintendo Discussion - Why the Wii is in short supply: Nintendo plays it a Wii bit cautious

Avinash_Tyagi on 08 December 2007
ymeaga1n said:
Avinash_Tyagi said:
The person who wrote this article doesn't really understand Economics and Buisness, now granted Nintendo doesn't want to have excess supply, however they do not want to have a shortage of this level, and how do we know, it comes down to the fact that the console market operates in a state of monopolistic competition, in which product differentation is key to profits, and where a firm's ideal level of production is where Marginal cost equals Marginal revenue (marginal revenue being steeper than the normal demand curve), We know that Wii's production is no where near that level since at that point it would only be able to sell more product by lowering its price, the fact that there is large unfulfilled demand, even at higher prices, as evidenced by Ebay sales shows that Nintendo would not have to lower prices in order to sell more, indicating that production is not at the optimum level for Nintendo and that it is losing potential profits, something not good for Nintendo, only someone not versed in economic theory would consider this a good thing for Nintendo

We have an economist amongst the gamers! lol Everything you said is true. But it depends on how much of a shortage it is. If Nintendo is producing near its equilibrium quantity, it's still is generating a lot of revenue. Hype can be advantageous. Economics is pretty clear-cut, doesn't really factor in something like hype. What they should do is increase the price of the Wii to bring the quantity demanded down to what they're supplying, then they would be cruising :).

 BTW, CNNmoney reported that they will not be increasing production again. http://money.cnn.com/2007/11/27/technology/bc.apfn.us.holidaysales.ap/index.htm?postversion=2007112719

Yeah but the massive demand for the Wii, even a year after launch shows that they are no where near the monopolistic equilibrium, hype is important to a point, but all you need for hype is to have demand that sligtly exceeds supply, right now the lost potential profits outstrip the benefits from hype

 Not in the short run they can't but in the long run factors are variable, not fixed



 

Predictions:Sales of Wii Fit will surpass the combined sales of the Grand Theft Auto franchiseLifetime sales of Wii will surpass the combined sales of the entire Playstation family of consoles by 12/31/2015 Wii hardware sales will surpass the total hardware sales of the PS2 by 12/31/2010 Wii will have 50% marketshare or more by the end of 2008 (I was wrong!!  It was a little over 48% only)Wii will surpass 45 Million in lifetime sales by the end of 2008 (I was wrong!!  Nintendo Financials showed it fell slightly short of 45 million shipped by end of 2008)Wii will surpass 80 Million in lifetime sales by the end of 2009 (I was wrong!! Wii didn't even get to 70 Million)

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ilovetogame on 08 December 2007

i don't think they need to ramp up production at all. it would be costly to them to ramp up production again and then they might find themselves with too many units just sitting around. obviously they are short this holiday season, but since they ramped up production to 1.8 they've been storing up units for the holidays. i think they were selling about 1.3 million per month this fall so they were saving half a million a month. i'm sure once the holidays are over 1.8million a month will be enough for the normal part of the year until they need to start saving up for next holiday season at which point next summer they may want to increase production again to like over 2 million if the wii is still selling as well as it is now just for the months through xmas to actually be able to meet the demand for xmas '08 unlike this year.

now that production is 1.8 million a month i really don't think wii's will be in short supply at all until next holiday season.



end of '08 predictions: wii - 43 million,  360 - 25 million, ps3 - 20 million

 

Games I've beat recently: Super Mario Galaxy, Knights of the Old Republic, Shadow of the Collossus

 

Proud owner of wii, gamecube, xbox, ps2, dreamcast, n64, snes, genesis, 3DO, nes, atari, intellivision, unisonic tournament 2000, and gameboy

stranne on 08 December 2007

I've noticed that if you bring up the Hardware Comparision Chart from http://vgchartz.com/hwcomps.php you get a nice line at 440k/week, which is about 1,8M/month. Nice overview.

Looks like 1,8M might be enough...if not SSMB and Wii Fit create even more demand. And maybe they need to increase it more to stack up for Xmas 08.