How does one create demand?  (Other than creating an amazing product that interests people?)

A vital product, but again Nintendo is not  oil. They would have to do what you wrote. There are only so many trendy shoppers out there.

 Yes they did.  They moved units over to Europe when the Euro was trading $1.50, shrinking the U.S. supply.  Which in turn created higher demand in the U.S where it is still hard to find a Wii on the Store shelves.  They could have allocated more units to the U.S but that would have been bad business. 

The right kind of advertising and building hype works wonders.

2006 and 2007 are irrelevant for 2008. Again, demand should be met in most regions considering the amount of time on market as well as the vast increase in production over 2006 and again in 2007.

I still expect to see a slight premium over current secondary market pricing closer to Christmas, but you're deluded or possibly sitting on a pile of Wii consoles waiting for the right time to "make your thousands" if demand skyrockets as you seem to think it will.

Having a limited pool of people willing to pay huge premiums over retail do NOT represent the majority consumer. Hearing about an anecdotal instance where someone pays a thousand for a Wii in 2008 does not mean that's what they're worth to the average consumer, who is probably picking up a Wii right now at RETAIL PRICE since they're now readily stocked.

Console sales aren't static any more than the rates of production. That should really go without saying.

To use your own example: how much does a Furby or Tickle Me Elmo go for right now? Not thousands. Not even hundreds. Retail at best. Hyperinflated prices on any mass produced product are fleeting. The Wii just managed to command a premium longer than most, which is not to say that it will stay that way forever.

Advertising and hype will only last for the short term.

Eventually, the product will have to rely upon word of mouth from end users to sustain demand.

To put it simply; enough people love the Wii to recommend it to others and enough people have played it at someone else's house to want one of their own.

At that point, it has little to do with marketing or hype as most consumers are already well aware of what the product is about.

The system was selling out in the US well before that, so that doesn't really prove anything.

It was selling out in the US from launch until about fall of this year, so it's pretty hard to convincingly prove anything in that regard.

It's still fairly safe to say that a favorable exchange rate did mean more units allocated to EU meant better profit margins for Nintendo.

Whether or not that directly translated to lower sales due to lower inventory and higher demand in the US is open to debate. Demand doesn't rise due to lower inventory levels: it just means demand is not being met by current supply.

Whether or not you believe that means people think this merits a run on supply (as in "oh no, they aren't making any more consoles so I must buy them all now.") is a personal interpretation.

I (personally) think that Pachter's conspiracy theory about Nintendo's allocations is (much) more of a sign of people who are unwilling to accept the Wii really is that popular ... Even with the poor exchange rate Nintendo was still shipping a ton of console's to North America and we never really tracked a "slow" supply.

Back to the OT ... Iwata is just making the same kinds of statments that all console manufacturers make in order to prevent people from anticipating a price reduction. Unlike most manufacturers though, people are taking Iwata more seriously because there is little (demonstrated) need for Nintendo to reduce the price of the Wii being that they are still selling amazingly well and the other consoles have yet to do anything which has impacted their sales.

I can't help but wonder how much profit Nintendo yields off of every purchase I remember when Wii was first shown off, EA and Sega put the manufacturing price at roughly 70$, sparking rumours that the Wii was going to be cheap.

Of course we all know it debut at 279.99$ CDN and hasn't dropped in price since. The hardware must have become cheaper to manufacture since then much like it has for Sony and Microsoft.

Even with the 360 becoming cheaper then the Wii. Wii still outsells the 360 and the now cheaper priced PS3.

I bet Nintendo cuts the hardware price once it costs them about 25$ to manufacture and sales have begun to dip.

I mean think of the profits Nintendo must be making off the hardware as well as the cheaply developed WiiFit, WiiPlay, WiiMusic etc...etc..

In other words I'm guessing the first price cut will come in 2010, when the competition starts unvieling their next generation consoles!