haha I read that image as "Increase Button Production" first which really confused me.

Why would they hold back supply know when they are trying to make 600k more? Everyone above already explained credible reasons as to why the shortage is honestly occurring. The only instances I've seen Nintendo display saving systems, is when they drop a ton of systems for a new game release.

Since when is holding supply like they are doing now a bad thing? You think there would be demand with an over abundance of supply? Even people like my Mom, who has never called video games more than tic tac toe is aware of the Wii's shortages.............................MY MOM!

Anyone that thinks Nintendo is deliberately withholding supply to release at a time when it is guaranteed to generate free publicity must be a fanboy idiot. The fact that the Wii sold a record-breaking 400,000 units during the week it's rivals biggest game was released, when it only sold 75,000 the week before, is purely a coincidence.

Those fanboy idiots probably think that when home shopping channels say an item is in "limited supply" it is just a tried and tested technique that has been repeatedly proven to increase sales.

Besides, why would Nintendo want to stimulate consumer demand by using effective sales tactics that would be, and have been, employed by numerous other companies? They're not in this business for money, they're in it because they love us.

Yeah, Kotaku's crap got tiring a long time ago.

Funny, but I disagree.  There's a difference between holding back supply for game releases or allocating supply by region and from limiting actual production to the point less product is even made to create demand.

Right now Nintendo stockpiles supply for regional game launches yet they aren't preventing Wiis from being sold.  Those Wiis they hold back will be sold during that specified launch weeks later.  Even when supply is met a certain amount of product will be held back by all companies for game launches/holidays so they don't experience bad PR by having little to no product available.  Nintendo releases more Wiis in Europe and Japan for game launches even though it isn't supply constrained and I bet both MS and Sony shipped extra PS3s and 360s before GTAIV even while they had healthy supply available (MS especially after their shortage fiasco at the beginning of the year).

What people implicate is that Nintendo intentionally manufactures less Wiis so supply is never met creating more demand.   That is ludicrous as Nintendo isn't crippling its production.  It took the PS2 (the highest selling console of all time) just under 180 weeks to hit 50 million units sold.  With Nintendo's own projection a few weeks ago they plan to hit 50 million units at the end of this current fiscal year which would be around 130 weeks on market.  That's a full year earlier!  

Could they increase production even faster?  Sure, they could start producing 8 million Wiis a month next month.  But there's two major problems with that.  First off quality control would plummet and Nintendo has worked hard to put out reliable hardware in the market.  Secondly Nintendo was burned in the past by massive supply by overestimating demand. 

Nintendo pauses Gamecube production 

As you can see back in '03 Nintendo actually paused production of the gamecube since they had too much unsold stock sitting on shelves.  Nintendo obviously doesn't want to make that mistake again so they are reluctant to increase production by an insane number.  That's why they are slowly increasing up to 2.4 million as recently suggested.  If there's any validity at all to the theory of Nintendo limiting production themselves it would be because of the GC fiasco they don't want to repeat and not to spur demand. 

As a sidenote that GC article is some great reading a few years later as Iwata talked about their new direction and a great tidbit at the bottom.

Investors are concerned that Nintendo has not risen to the challenge from its competitors by targeting the casual user market, the source of most of the growth in games demand.

So if anything, Nintendo is just trying to avoid saturation. That what you mean? 

Amidst my horribly nonsensical ramblings.... uhhh kinda.

My theory is Nintendo wants to increase production. They just don't want to do it too fast to the point they overproduce like the GC fiasco. Didn't they ease into the 1.8 million a month with 2 or 3 gradual increases last year? I think that'll happen again. This 2.4 increase is probably just the first step to see what happens.

 Your post + the image = The most epic win inside a single thread!

If it was that easy to sell 20+ million units by creating artificial shortages then every company making every product would do it.

And ya Kotaku makes me scratch my head too sometimes. I think they've joked about this so much that they believe it now.