There's also the distinct possibility that 1.8 million is a worst-case or average estimate. They could easily have produced a few more than exactly 1.8 million a month.

 Yes absolutely some could be accounted for by VGC numbers being off, but it could also be off the other way so its hard to try and account for that specifically.  But I do think you are correct in saying that 0.5m over the course of 6 months is well within the confidence interval.

@Sky, it is more likely to be an average than a worst case since worst case would be 0..but I know what you mean.  The problem is that I would have a hard time believing that their production range was much bigger than +/-50k a month and for Aug-Dec thats only 500k if we assume it maxes every time and that 1.8m is in fact the worst case.

@superchunk,

I think I did missunderstand you initially, but I think we are in agreeance now.  I definitely think you are correct that production was adjusted to meet demand where it was needed and you agree that that alone couldn't have produced these numbers..a nice middle ground =) 

Does anyone know when NPD reports for December are out, and when Nintendo releases their next quarterly statements?

Very nice write up Sqrl, i just hope we never overestimated the wii, even if we fall in the 15% we could be off by alot for december.

Answers:

One: When they produce that 1,800,000th Wii on August 31st in China, it isn't available at the Chicago, IL Walmart that night at 6:30PM.  No, it takes the boat ride to Seattle first, then shipped by truck to Chicago.  That Wii wasn't sold until some day in October.  Now if you want to say they are sitting on Waves of Wii's, I'll go along with that.

Two: Since they did have a limited supply to sell, 'when' to sell it becomes a critical decision as well.  They and their buyers (ie stores) want that Wii to be sold in the holidays, when the $$$ are flowing and more than just that Wii will be bought for Christmas.

Three: Free publicity can work for you or against you.  By holding back some (probably in China), sales increased over the holidays.   Say instead of holding back, they sold out all 1.8M in October.  Impressive.  Then the same in November.   With Thanksgiving sales they couldn't do better?   And a measly 1.8M in December.   The holidays and simultaneously, the fad is over (couldn't do any better than 1.8?) and a lot more noticable stories of not meeting demand.

Yes, for public remarks, Reggie is going to tap dance around the issue.  But only because so many want to believe in the NJ5 "Increase Production" button theory.  And most don't care that there isn't a "Instant Decrease Production" button in place like Ford has.  Also known as massive layoffs.  

Yes, but Sqrl did it in a different order.  I'll bold the critical step:

December sales = 4.58m.
December production = 1.8m.
4.58m - 1.8m = 2.78m consoles had to come from somewhere.
2.78m - 2.3m (the extra from August through November) = 0.48m.

Same thing.

I'll be honest, I'd be more impressed with what Sqrl did if it was something I didn't already know.
This is almost like arguing about abortion. Yes, there are cases where it needs to be done for safety of the mother and where a life isn't yet feasible to be taken, but if it's being done out of hand and as a substitute for responsibility, it's abhorrent. Everyone still ends up arguing the case as if the other side doesn't exist at all.

This is a case where Nintendo had been holding back stock in order to be certain to meet demand for the holidays.
I do not see this as Stockpiling, I see this as RATIONING. People aren't getting shot, riots aren't breaking out. People who are willing to wake up early and do a little hunting, or pay a few extra hundred dollars for someone else to do the hunting for them, usually are able to get a hold of one.

My definitions:
Stockpiling = holding back ample supply to incite riots over hard to find system that really isn't hard to find
Rationing = allocating limited resources to prevent riots over a hard to find system that really is hard to find

Well to be fair I never claimed it was something that nobody knew but me, I think a lot of people thought there was stockpiling before I had given it any consideration but I know there were plenty of people who vehemently denied it also. I'm not asking for an award or anything for making this post, I'm just trying to write the final chapter in the debate on whether stockpiling exists or not.

Unlike abortion this topic can have a clear correct side. Opinions muck up the works in an abortion discussion but with this it is a zero sum proposition...either one side is correct and the other isn't or vice versa. With an abortion debate there are shades of gray on several points.

As for the terminology, like I said in my OP you can call it what you want but at the end of the day it all amounts to the same thing. The point of the thread isn't to play semantics or parse words with folks its to point out that companies do in fact hold back consoles during the year specifically for the holidays when demand is at its greatest.

I understand that there are differences between stockpiling and rationing but for the purposes of the overall sales picture, but what  I am saying that its nitpicking and ultimately detracts from the underlying point uneccessarily.

Thanks! I should add this to my sig...

"sqrl, you are right." -ioi

On a serious note, point #2 was something I brought up a while back and its something most good retailers do I would imagine. There is simply so much for them to gain and so little for them to lose that they would be silly not to do this.

PS - Most of the credit goes to ioi and those who help him collect data. Collecting valid unbiased samples is the tough part of statistics, interpreting that data is child's play in comparison.

Yes, I will be perfectly fair, you never did make that claim. I guess I had just so easily dismissed the people who were saying that Wii wasn't holding back stock as merely being confused over the idea that Wii was not holding back stock artificially. Of course Wii has been holding back stock, but in the same way any company with half a brain would when going into a holiday season with limited supply.

I also agree in terms of it being nitpicking in terms of the sales picture, but the arguments I had seen weren't as much sales based as fan faction based, which is why I felt it necessary to point out the difference in my view between stockpiling and rationing.

Those aside, I'd say you accomplished what you intended to do with this thread, so props to you for that.

Why not just add the months, then you get an "about" figurs of what they produced.

Before launch :- 2m
1/2 Nov :- 0.5m
Dec - March :- 4m
April - July :- 4.8m
August - December :- 9m

Total = 20.3 by the end of December.

Of course various factors change that, like production is not static, (and is likely a bit above 1.8 now) and increases are not sudden, It will not have gone from 1.2m rate on 31st July up to 1.8m rate on 1st August for instance.... but it should give a vague idea that they have produced 20 million by now, even if it might be short of that on retail shipments and consumer sales.

Also I remember a period of Nintendo being about 1.5mil/month before the 1.8m announcement, but that could have been whilst they were increasing to 1.8.