I think if the Wii U falls short of shipment estimates for the fiscal year end Nintendo will have more freedom to do what is necessary to make the Wii U more successful. In my opinion, the likely outcome of this would be to discontinue the basic version of the Wii U and start selling the premium model for $299.

With the yen weakening, Nintendo may have more room to maneuver on price sooner than they expected.

Iwata has already admitted that Nintendo misjudged the demand for the deluxe model; implying, though by no means quantifying, that demand for the basic unit is weak. Further strengthening this suggestion comes from Nintendo of America's reaction to NPD results: "The demand for the Deluxe SKU, which was essentially sold out at retail this holiday, and the strong attach rate of New Super Mario Bros. U, shows that we have the value and the games to drive momentum in 2013."

We can assume that basic demand is low, then, and it's not surprising. The basic package is a good bet for the wider, family market, but bar Wii, the wider family market don't buy consoles at launch. As with 3DS, Nintendo have badly judged how to launch their system in an increasingly competitive market. They should be focusing on hobbyist consumers likely to buy new hardware after six years on the market by producing more deluxe units, rather than attempting to grab a family market with an unproven, relatively expensive machine. The lack of a pack in title makes the basic model even worse value for money and even less appealing to families.

I expect Nintendo to miss their shipment targets by 500,000 units, with an install base in the 4.2 to 4.4 million range by the end of March--that could be optimistic, though I expect sales to pick up slightly and remain above 100k per week. If Nintendo do miss their targets by that margin, I expect, and hope, Nintendo realise the basic package at launch is unnecessary, and they consequently cease production of the basic and drop the deluxe model down to basic price.

I also believe that if the yen weakens sufficiently, and European sales (as I expect them to be) are particularly weak for Wii U, Nintendo may lower the trade price of the Wii U in Europe, in order to give retailers more leeway with pricing and bundles.

Yes, eventually.

I see no reason. The WiiU basic is vastly outselling the Xbox 3 and PS4, which have sold a grand total of 0 so far this gen.

The Wii U is also losing more money than the Xbox 3 and PS4, they are losing zero dollars so far this gen.

Oh no actually Xbox and PS4 R&D is currently eating up a lot of money id imagine. Final phases and what not.

So the wii u is losing money from its r &D + from its poor sales while the Xbox 3 and PS4 are only losing from their R&D. Got it,  Thanks!

Nintendo should never have launched the basic pack in 2012... They should have released it with Wii Fit U. But now they're stuck with it. Why discontinue something you'll be bringing back later on? If they take it off the market it's because Wii Fit U bombed hard. I'd say by Spring 2014.

But Xbox and PS4 R&D is clearly way more costly.

Either way, the Wiiu is outselling its INTENDED competitors, fair or not. Nintendo has a whole year to evaluate its place this gen. Lots of time to plan and prepare.

No, you got it wrong. Sells less -> less shipments -> less money lost. Less sales mean less losses.