Xmas 2009.

I'm pretty sure I've typed this before, but after it stops selling out + 6 months. So with the current outlook, I would expect maybe spring 2010.

When there comes a point where the systems don't need to be heavily restocked all the time to meet demand, the price will lower, to bring the demand back to full steam. I think that the little white box still has about another year or so to get through before that happens, so I'd guess around 2010 or so.

2010, i think 2009 wont as more third party effports start to driver sales

Why would I quote a very specific passage from Blue Ocean Strategy if I wasn't reading Blue Ocean Strategy? Granted, I haven't yet finished the chapter on pricing, so it's entirely possible that there's further details on when a price drop makes sense, but so far the tone of chapter 6 is "get the right price from the start and stick with it as long as you can".

Edit: Just finished chapter 6. Not a word on price drops besides that brief mention earlier. The rest of the chapter is dedicated to basic strategies for finding the right price point and getting a cost structure which optimises profits, as well as properly selling the idea of your product to your employees, your investors, and your intended customers. I also snapped a quick photo (beware 56k users, it's over 1MB): book and squirrel.

Another Edit: Just finished the entire book. The last chapter was highly elucidating and reinforces what I said: only when the market reaches the point where direct competitors of the same values enter your market space do you need to worry about evasive maneuvers like price cuts to remain profitable. Until competitors exist in your market space, however, your product maintains an almost monopolistic reign due to the assymetrical values your product has versus its competition.

Here's an interesting bit from the last chapter of BOS: the barriers to imitation that protect a blue ocean product from interlopers, and can protect it for as much as 10 to 15 years depending on how occupied the overarching market the blue ocean product branched off from was. I shall highlight the Wii's presence or absence for each one.

* Value innovation that is in defiance of traditional industry logic - This is one of the Wii's strongest points, especially since WHAT values it brings to the table are not even fully understood by most (hence why misinformed claims that a 360mote or PS3mote would make the 360 or PS3 able to compete with the Wii exist). The Wii's strategy is one of shifting market focus as well as controls, and having one without the other won't do much.

* Brand image conflict - This one hits hard too. The Wii's image is very family-friendly and non-discriminating. The image borne by Sony and Microsoft, however, is one of exclusive focus on a core gaming audience. The difference is quite significant.

* Natural monopoly - The Wii does not have this, nor can it really have one due to the nature of the market. The closest it will ever get is having a large enough user base that any potential competitors would have to develop a value or sustaining innovation that outmatches the Wii's authentically selling-point values.

* Patents/legal permits preventing imitation - There's some of that going on, but again, the Wii is not a heavy contender in this kind of barrier. Nor can it be in this industry.

* High volume leads to market advantage, undermining imitation incentives - Again, this doesn't really factor in so well for the Wii due to the nature of the market. Sustaining innovations negate this advantage.

* Network externalities prevent imitation - Doesn't even apply, again due to the nature of the industry.

* Imitation requires significant changes in policy and cultural perception - Here's the real killer to Sony and MS in imitating the Wii. The Wii's strategy is so radically different that for Sony and MS to imitate it properly, they would have to forego their existing market all but entirely. Which is a losing strategy due to the other barriers to imitation.

* Value innovation leads to brand loyalty - Yes, brand loyalty does exist. No, it does not exist for very long. Yes, it does have significance. For roughly 10 years after the release of a product, customers can be expected to hold some level of faithfulness towards the original innovator (hence why the SNES successfully claimed the market over the Genesis, in spite of a late start).


All this in mind, you can see that Nintendo has basically every conceivable advantage in setting up barriers to imitation as is possible in the market they're in. Expect the Wii to remain without significant same-value competition for a good decade, and without any same-value competition for probably at least another 4 to 5 years at earliest (from the incumbents, MS and Sony, anyway; a new player could theoretically enter the market and overcome the barriers more easily than MS and Sony, but the most likely candidates have not stepped forward yet).

If the Wii drops it price when MS undercuts it will not look like the Wii is losing steam. It would just look like good competition.