To make the outsource production as flexiable as you'd would like ('you make your contracts scalable and extensible. Also, production capacity does not have to stick around forever. You just write options into the contract.') is going to cost Nintendo up front.  Nintendo has to find Chinese manufacturers that have high quality, does minimal prirating (ie the 'Viis'), low cost, good assess to getting parts deliveried them.  To ask all of Nintendo's parts and assembler manufacturers to give maximum quantity flexiablity as well can be done, but at what cost? 

From mid-July to mid-October, Wii sales in Japan fell over 80%.  And back up 450% to now.  Since it is possible for demand to vary this much, that would have to be written into the contracts.  The way to get the cheapest unit cost is to guarantee the manufacture a set amount.   Such as the 1.8 million a month.  No way will a manufacture give you the same cost per unit if you tell them, this month we want .36 million, but in a few months later, we want 10 times that much.

Why doesn't Nintendo press the red button?

Because in most movies that *I* have seen, pushing the red button ends up badly, up to and including total thermonuclear destruction.

Actually Nintendo is so desparate to increase production that they Contracted me to make Wii's in My Garage... It did not have the machinry need so I just Painted some Gamecubes white and rigged up an old NES gun to some satilite remotes...

It was going pretty until my neihbors thought I had a meth lab and the police crashed me... Oh well...

I don't believe nintendo will be doing this anymore once they saw how expanding production hurt the Quality Assurance of the Wii, my Wii had a 30% failure rate... nearing even that of the 360...

the production in april was a million a month but now its 2 million hense its around 500'000 per week

 dare taken...wait what did I say?

 I just mocked that some of the posters on VGchartz earlier this year when they said that Nintendo's sales/demand would drop feb/march/april of this year...and that nintendo must have listened to them ;) ...

confusion insues... 

Do you think 1,8M/month will be enough for 2008?

Also, I'd be interested in hearing your opinions on what can be deducted from Bod's ToysRUs observations. If you get 100 Wiis a week to your store and they sell out in an hour, what would be the real weekly demand?

I understand that there are a lot of factors involved, but go ahead anyway.

@ stranne

It is almost impossible to gadge to demand until the Wii reaches the point where it is ALMOST selling out, I honest thought that it was getting close around may of last year but they never met it(this is when I believe Nintendo did their holiday stockpiling). Obviosly you cannot say that 100 sold out in 1 hour and Toy's R Us is open for 120 hours a week therefore we would have sold 12000... Part of the reason people do buy them so quick is their scarcity.

Does the sell-out rate effect the numbers you order for the next week? I guess it should to some degree. I don't know anything about these things, maybe it's just a qualified guess by the manager.

Of course with the Wii in continuos high demand and stable price it would be more a matter of how many you could put away somewhere. If you could get 1k for next week you would, they would sell out soon anyway even if they didn't sell out that week.

As I've pointed out in another thread, it takes Nintendo approximately 5 months to adjust production levels. Nintendo could buy new production today, and it would inrease their production for May -- would you be willing to bet a lot of money right now that Wii supply and demand will be negative in May at 1.8 million units per month?

Nintendo has been facing the same problem all year. In January it seemed like they'd need increased supply, but who knows how much. And they would be increasing supply for May. Would they meet demand by then with the current supply? It looks like by April or so they really got the wheels rolling on getting a lot of new production because they've managed to increase it for ~September.

Either way, it's hard to handle this level of production if you don't own your own facilities. Increasing production by approximately a million units a month is huge and very risky.

That said, yes, Nintendo blew it. They needed to gamble more aggressively, and they needed to get 1.8 million per month on shelves for a much larger part of the year. It would be awesome if Nintendo could meet demand in the US, but no one as any idea how much demand there is in the US other than "a lot right now."  I wouldn't consider this a missed opportunity, but a series of missed opportunities.  Fortunately for Nintendo, they way they positioned themselves this generation there will be many more opportunities.