One way to look at it is that Nintendo is giving the store free money and great advertising.

How?  By shipping a Wii to the store, the store is guaranteed to get the sales $ on day 1, but does not have to pay for the invoice until 30 days plus later.   And the store can advertise that it has Wiis available, pulling in customers away from its competition.

All the store has to do is push the DS a little bit harder, which isn't that hard to get a sale for either.  After all, it's not like they are having to sell a pink PSP like UK Dixon had to.  (see http://www.vgchartz.com/forum/thread.php?id=11948#end )

@loadedstatement:

You are right on spot. I don't think I have seen anyone state the true reason Nintendo doesn't make more Wiis like you. Just as you said, building more factories would be a bad choice for them, as demand will drop off eventually. Also, a large investment in a factory would increase the fixed cost put on each Wii sold. This would reduce their profit. While they may say that they are putting out as many as possible, they are really saying that they are putting them out at the most profitable rate. Sorry for my rant. I am taking business accounting now.

 I don't think people are giving Nintendo enough credit.  They already have increased the capacity by a lot.  They launched with around 1 mil per month and now they stated they're at 1.8 mil per month.  That's a huge increase.

Some people really don't understand how difficult supply chains are, especially for things like this where each piece is produced by a supplier who gets it from another supplier.  Working with suppliers for various manufacturing things, its reasonable to expect half an year at least to get production increases.  An 80% or so increase from EVERY supplier thats involved in a year or so is actually pretty impressive. 

I was watching "morning cartoon" TV slots yesterday... and was AMAZED by the number of game related ads.

I *swear* for one TV break, out of 5 ads - FOUR WERE FOR THE WII!! (including a couple of "general" games ads - THQ, etc..).

Advertising has gone through the roof for all game machines.

Smart move, Nintendo getting the pimp hand out on retailers.

This is a SNEAKY trick all right. Smart buisness wise... not sure if it's the most ethical practice.

Just for reference, twelve years ago, Nintendo instituted a policy where companies that marketed and sold their "competitors" products woudl recieve less Nintendo product. THAT is bullying.  This is corporate incentivizing.

Not saying it's necessarily good, but it's still leagues away from the "Nintendo is an arrogant bullying company" tactics of yesteryear. I can seem some disturbing similarities, of course, but I'm not convinced this is a slippery slope.  

"We're adding a little something to this month's sales contest. As you all know, first prize is a palette of Nintendo Wii. Anybody want to see second prize? Second prize is a set of steak knives. Third prize is you're fired."

Does that really matter so much now? Just 2 weeks left until Christmas (3 weeks until Japanese New Year). Come January those 1.8 million per month will be plenty to fill all shelves.

Exactly Reverie. Those 1.8 million a month will sit nicely on shelves for a good 1-2 days before selling out.