TheSource said: If your going to copy a whole article you got to link it. Even here in the forums, just as a courtesy. Good article though.

 

A courtesy?  I thought it was the law, at least in America.

That is simply stupid. A 400$ Wii wouldn't have sold. There are two things to pricing supply and demand which would clearly have supported 400$ prices and the perception of fairness by customers. And this would have been too much.
If you add a couple of wiimotes and nunjucks for the main attraction of the wii (playing with friends) you are at 400 anyway.

Besides a 400$ price tag could have killed the Wii before the hype train got going and raising the price after the success was evident would have been catastrophic for image.

No they should simply have upped the supply faster. The Wii is not exactly fusion power technology. Man this Pachter guy doesn't know what hes talking about.

I have to say that the article was crap... Let's look at few key points there:
1. Supply issues; Nintendo reps have stated that it takes five months to ramp up production.
a) Since the demand is unknown, it needs to be tested if the further ramp-up is needed, so a ramp-up pace 1/year is pretty good.
b) Why does it take so long, as stated in the article, Wii has no "special parts inside", but the keyword here is custom. If you have custom parts, you have propably only one manufaturer and you need to plan the manufacturing lines just for them, and it takes more time than it takes with "bulk" parts from various manufacturers, when the production can be increased with buying the overproduction.
2. Shipments to NA: Considering that the Americas is where the biggest shipments go, "holding back" is just BS. And what should be noted is, that Europe have experienced supply issues too.
a) We know that Iwata has told us, that profit originates from software, so no matter how low USD would be at the moment, you still will profit from the software, that is sold for the created userbase when the exhange rate goes up again. If you don't create the userbase now, you lose a shitload of money later (for Sonys lossleading strategy this seemed to make sense for everybody, but when suggested that Nintendo would benefit from software sales, it somehow doesn't seem to make anymore).
b) It's always better to make money, than not making it at all. Each Wii sold (even in Americas) makes profit. By not selling the the consoles, Nintendo would lose profit. In any case, we only have timed generation, meaning the life of a console is limited, when you need to sell them as much as possible. Waiting for currency exchanges to change after the next five years doesn't mame any sense, since it all is only lost in sales.
3. The demand. Pachter was wrong about Nintendo not guessing Wii getting more popular than PS2, considering Iwata mentioned expecting it to surpass PS2 at E3 06 and the fact that Wii has been manufactured at a faster pace than PS2 right from the beginning. If Nintendo didn't expect for it to sell so good, why manufacture so many of them?
4. The price isn't right. Looking at Europe and Japan, the price may be just about right (at the sweet spot for hardware). Besides, as i said earlier, Nintendo focus on making profit out of software, not hardware (again, why does this makes sense when Sony does it, but makes no sense when Nintendo is doing it).

@Picko: So, what stupid did Malstrom write to his blog post? And what's the issue with the oil? What Malstrom wrote is excactly what's happening with oil right now.

No, it wasn't priced too low. With the Wiis pricing, it is able to go far without pricecuts and it will sell longer with the current price. The problem with PS360 pricecuts is, that people wait for them and buy their console either after the price goes down or their most anticipated game comes out (this is where you don't get additional software sales). After all, Nintendo wants to make profit with the software, not hardware. Besides, you don't profit from selling your product with price, you profit from cheap manufacturing.

@steven: The issue is, that doing as Pachter suggested isn't maximizing revenue and profits.
Besides, if they invest their low USD profits to USD, they can make the money "back" after USD goes up again. Simple, buy with USD when it's high and buy with Yen when it's high.

@HappySqurriel: No, you're not the only one, but good to note that out.

If I was Nintendo and I had a wildly popular console on my hand and could not service worldwide demand with it, I'd sell my consoles there where they make me the most money.

Being Europe and Japan due to currency issues (yes, even if you take out the taxes etc you still make more money in Europe for a €250 Wii than in the USA for a $250 Wii).

Naturally I'd take care to ship more or less based on key titles made available (such as Smash Bros, Wii Fit, etc). But I'd still prefer whichever region makes me the most money.

Why make a conspiracy out of that?
Because it looks like Nintendo is doing exactly that this year so far. And nothing more sinister :)

@Geldorn: If Nintendo would make more more money in the US, do you think US would get more shipments? I don't, since the issue with marketshare is a lot bigger than short-term profit (when you are able to make the money back anyway in the long term by making currency related investments).

The dollar is the real reason. They could supply more here and less in Europe but they make so much more money out of Europe.

Geldorn said: If I was Nintendo and I had a wildly popular console on my hand and could not service worldwide demand with it, I'd sell my consoles there where they make me the most money.

 

Where you start contradicting yourself and Pachter, is when you realise that Japan and Europe are serviced already, so only NA is left with not enough consoles. So all the supply goes to NA.

A funny way to self-own oneself though. Basically, why trying to imply a conspiracy that doesn't exist, unless you're a competitor's shill? Why trying to imply the currency is the cause, unless you're a competitor's astroturfer?

@Godot: That makes no sense. Why take away supply somewhere, where you need to compete as much as you can. Wii is the first Nintendo console that actually is winning in Europe. Besides, they already ship Americas more and Europe less, just check the frontpage.
13,59 Americas
10,87 Others

Besides, as i said already in two posts, it doesn't really matter but short term, since Nintendo is able to make long term currency related investments. The thing would be different if Nintendo would need to use their profits right away. What matters the most, is profit made in local currencies.

http://seanmalstrom.wordpress.com/2008/08/22/nintendo-says-pachter-is-wrong-about-the-wii/

/thread

this is bullcrap

ookaze said: Geldorn said: If I was Nintendo and I had a wildly popular console on my hand and could not service worldwide demand with it, I'd sell my consoles there where they make me the most money.   Where you start contradicting yourself and Pachter, is when you realise that Japan and Europe are serviced already, so only NA is left with not enough consoles. So all the supply goes to NA. A funny way to self-own oneself though. Basically, why trying to imply a conspiracy that doesn't exist, unless you're a competitor's shill? Why trying to imply the currency is the cause, unless you're a competitor's astroturfer?

 

Funny, in my world NA has had less supply than usual for the Wii the last few weeks, while the rest of the world had more. As seen on the VGChartz homepage. What numbers have you been getting?

In fact, the whole bit where you say 'so only NA is left with not enough consoles' directly contradicts your 'NA gets all supply' statement.

 

The rest of your post is not even worth answering. Competitors shill? Get real man. I'm not the one who is claiming conspiracies exist - the OP has that bit quoted. I'll repeat it for you so you can read it this time round:

 

"Conspiracy theorists are saying that since Nintendo has already met their end of March goals (with 6 million units shipped), and are building up supply, continuing the demand, and ensuring awesome second quarter sales," speculates a May 2008 Geeksugar blog. "Unfortunately, with American retailers now running at 2.5 percent availability, some are expecting the Wii shortage to continue through 2009."

 

All I'm doing is further detracting from that bit of nonsense. Nintendo doesn't need to do anything to get a stellar 2nd quarter. The market is doing that for them!