I think there will be Wii shortages come Xmas...

I'm sure they are stockpiling, it makes good business sense. From a PR standpoint, they need to be the one of number one toys/gifts this Christmas, they need to sell out (which they obviously will) and outsell the other consoles by a comfortable margin.

The biggest selling gift gets a lot of press, if they have far too few units available at Christmas then that press will not be so positive.

Look what reggi said:

http://www.next-gen.biz/index.php?option=com_content&task=view&id=7173&Itemid=2

**Quoting myself from the other thread about supply.**



OK, newsflash for some of you:

Every electronics company in the world stock piles product for the holidays.




This is business, deal with it. I sick of people spouting about stuff they know little about. They have investors to appease, stock prices to maintain or increase, public and press to impress. All of which you do not do by selling the same amount units in December as you did in May.

Are we all clear on that now?

Q1 Financial Report

 

"...As with the DS, the firm’s shipping forecasts for the Wii have risen, from 14 million to 16.5 million for the fiscal year.... "

Q1 was ~3.5m, its reasonable to assume Q2 & Q4 will be similar which leaves us with the very simple math of 16.5 - (3*3.5) = Q3 or if we simplify it down we get Q3 = ~6m.

Now I realize you are trying to say you think it will be more like this....

Q1 = 3.5m, Q2 = 3.8m, Q3 = 4.3m, Q4 = 4.5m. But the current numbers don't fit that hypothesis. Right now we have 2 of the 3 months of data for Q2 and the Wii needs to sell 1,314,344 units in this 5 week period to meet that 3.5m number. So unless you have some magic information the rest of us don't I'm not sure what scenario you are looking at. Because I do not think the Wii is going to sell 1.6m units WW this month. And if it doesn't meet the Q2 prediction you lay out it throws the Q3/4 predictions completely out of whack.

Honestly I think your prediction here should illustrate quite nicely that you are off base. The idea that they will sell 4.5m during Q4 while 4.3m during Q3 is absurd to say the least. I too think the post X-mas effect will be rather large due to the console selling itself but that is just crazy and completely ignores the Reggie comment I quoted below. Since we can see that your Q3 estimate would require something like Oct=0.9m, Nov=0.9m, Dec=2.5m just to attain launch numbers when Reggie he clearly states that it will be "substantially" more than that.

9 Million Report

In responce to your questions on this issue, from what I have been able to garner from reading a number of articles, it seems Nintendo's supply chain was the issue and they were unable to support supply lines for that kind of volume. They were able to alleviate the problem to some extent but it came around March of this year from what I can figure. I think they are still in the midst of supply chain issues but much less so than before. Most of this is my speculation of course so you don't have to believe any of it, but the report is real enough and regardless of their reasons for it I think you have to admit its a pretty good reason to believe in stockpiling whatever the cause.

Past Consoles: See "Sony's Playstation 2" and "Nintendo's DS"

Statements from Nintendo: The part you are missing is this...

"..substantially more than the launch, substantially more than has been seen to date..."

If we look at launch we see in December alone the Wii sold just shy of 2.5m consoles. Substantially more than 2.5m doesn't sound like 3m to me but more like 4m-5m which supports not only my financial report analysis above but also my assertion of stockpiling unless you are claiming they can produce 4m units in a month. I'm not even sure they could produce 3m during a month this holiday. Shipping them last minute would be even harder, they have to be ready in advance to some degree.

The red hot statement is not intended to be some sort of Macho "Hoorah". Its basic logic that if you release a game on a system selling unprecedented hardware you can expect similar sales boosts. But to do so during the holidays is another multiplier on top of it all. You can take it as a "Macho" statement if you wish but its intended to illustrate the point that you so sorely missed with the rest of this statement.

And that point is that Nintendo is selling rediculousness numbers of consoles right now, this strategy is entirely designed to penetrate further into untapped markets and bring in game consumers who will not buy a Wii outside of X-mas so that they can tap into a market of game buyers who wouldn't otherwise buy games. They are taking a calculated risk that the people who can't get one now will get one later. And yes there will be some of those folks who hedge in on the X-mas burgeoning but not all of them and Nintendo is only trying to reach that market so they will show their friends the unit. The idea is that they need to get into as many circles of friends as possible because they believe the system sells itself.

As far as your digs at the "us folks" who just want to believe in it. Well I will just say I find that to be very pompous considering your lack of evidence.

Just figured I would add this in also...

”We are not taking our current success lightly. This is a long-term battle,” Fils-Aime said. - Reggie Fils Aime

I'm sure there a  number of ways anyone can interpret that, but I do think its nice to hear they are trying to stay grounded and not get carried away. 

go sqrl, go sqrl, it's your christmas
(whats with the name by the way? i always pronounce it squirrel... oh wait, just looked at your picture properly.)

sqrl,
re 9 million -
The article you link to said that UBS extimated 9 million Wiis shipped until the end of 2006. So your source is an analyst's forecast? I thought we agreed here long time ago that analysts are not particularly insightful. In addition, that article you link to said "9 million, up from 6 million, the official Nintendo forecast". Nintendo had that 6 million forecast for fiscal 2007 (April 2006 to March 2007) not calender 2006, so UBS is probably referring to that timespan and the article's editor seems not to realize this.

There was one real (not conjured up by analysts) delay, with Nintendo shipping only 3.2 million instead of 4 million units in 2006. I believe these 800k units were depleted in very early 2007.

re Q4 sales -
You do remember there is a difference between sold-to-retail and sold-to-consumers, right? I ask this for 2 reasons.

1. European retailers are stocked with Wiis right now. That accounts for 300k or 400k or more. Sold-to-retail is above 12 million now.

2. Japanese and American retailers are still waiting for their shelve units. Those could make 500k or 750k of the Q4 sales.

Both of these are one-time effects, because naturally I'm not suggesting that retailers actually consume Wiis. But sold-to-retail for any console should at least be 1 million units ahead of sold-to-consumers. That is pent-up demand Nintendo is still carrying around and probably won't satisfy this year, so why not satisfy it in Q1? Retailers need shelve units even at a slow season.

Above that, you do remember that the Wii is held back not by demand, but by supply? You cannot estimate Q4 by looking at Q1, Q2 or Q3 sales. I'd wager the Wii has now a demand of 4 million units per quarter and 6 million for the Holiday quarter.

The numbers I gave for Q2, Q3 and Q4 were not my prediction, just an example. As I said I am waiting for Nintendo's fiscal reports in October and January. Only they can hold proof to me one way or the other. And if you are still on vgchartz by that time I'd like to discuss this subject again in light of the new facts.

 While I agree that analysts aren't exactly the most accurate (especially as of late), how far off are we to believe they are with this prediction? If he was off by 20% it could be as low as 7.2m, but even at that number they almost certainly would have to be stockpiling by now. 

As far as the difference between shipped and sold, please take a look at my signature.  Back when sony changed the way they did their financial reporting, I was the one who came up with the idea to make a picture to explain it to people. The current incarnation of that graphic in my sig is due to the talents of "Your Mother" (thats his screen name, I'm not insulting you lol).  So yes I am very aware of this difference.

I will follow along with your numbering system for ease of understanding:

1) Ok if we want to say this is the case that is fine, but as you point out the pipeline that exists as the units transitition down the supply chain has been there since the beginning. And the units are moving through it not being consumed by it.

Because of how quickly the Wii is selling (even in places where it does stay in stock for a full week), each shipment is refilling the pipeline and there is a constant movement down the chain which for our accounting purposes has very little bearing on the final numbers shipped for a given period. To put it simply, they need to ship enough to replace what is being sold in a given period, this isn't always true in every situation, but for the Wii it is true right now.

2)  I'm not entirely sure what you are saying here, to be honest, perhaps you could elaborate a bit. Specifically on what you are referring to in the second sentence when you say "Those". I am pretty sure you are trying to convey some sort of supply chain mechanism but your wording is a bit vague to me.  Little more info on what you're referring to please.

On my estimates of Q1-4 using the simple formula.  Actually thats not meant to be taken as an in-depth analysis.  I think we if take a look at Nintendo's past reports we find that they like to be cautious with their numbers. The reason I bring this up is because while I think the effect you are eluding to (ie increased production) will be in play over the holidays and beyond but I don't think its going to jumpstart itself all of a sudden in the last portion of this quarter.

The very point that you make that the Wii is supply constrained and not demand constrained is why we should have seen signs of increases on the levels you are implying in our numbers for this quarter already.  There is signs of increase, but not enough to make me think Sept is going to explode into that many extra units. Currently given the 5 week period of Sept I think it is likely the Wii will hit the 1.3m mark for the month and 3.5m shipped for the quarter pretty closely.  With the possibility of supply increases towards the end of Sept I think its effects will be felt a bit to late for the Q2 financial report and definitely too late for the sellthrough numbers tracked on this site.

But moving into Q3 we should see this trend pick up I agree, and I think production increases can account for (at the high end) the 800k increase from 3.5m(Q2) to 4.3m(Q3).  But I do not believe that when the phrase "substantially more than the launch, substantially more than has been seen to date" is used by the conservative NIntendo that 4.3m units for the entirety of Q3 fits that at all, nor do I think production will be up enough to sustain the kind of post X-mas numbers there needs to be for them meet a model like the one you provided and meet their predicted goals from Q1.

Actually in light of these new numbers I won't be surprised if there is another raising of the estimates with the next report.  Would that surprise you if they did raise estimates again? 

Ultimately, I think we could see 4m in December alone this year (on the high side), and going with that high end number I think we could see as much as 7m in Q3 (Oct-1.2m, Nov- 1.8m, Dec-4m).  But I think the likely scenario is something like 6m for Q3 (Oct-1.2m, Nov-1.6m, Dec-3.4m).

Just curious but what do you think the Q3 monthly breakdown will look like?  The reason I ask is because I am trying to figure out how your belief that there is no stockpiling is reconciled against this unprecedented statement which directly refers to launch and thus the 2.5m in Dec number.  Do you think production will be up that much to meet that kind of demand without stockpiling?  I guess I am trying to figure out how this puzzle comes together from your viewpoint, and since I am not at your viewpoint I am having a hard time with it. 

Ok, my viewpoint
- I have read all the arguments about why it's supposed to make business sense to sell something later that you can sell now for the same price. I still don't agree with any of them. Real money beats PR by a hundred times.
- Therefore I think Vgchartz is undertracking Wii sales and Nintendo will report a shipment increase for Q2 over Q1 and another increase for Q3 over Q2.
- I don't want to estimate the production increases because there's no reliable information about Nintendo's internals. So far 800k has been their high mark for Wii shipment increases quarter-over-quarter. I would not be surprised to see another raise of their forecast at all. I just believe that it depends on their ability to produce, not on secret storage.

Regarding Reggie's statement,
I'm not sure he was talking about month-by-month supply and neither about international supply. He was talking about the Holidays in the US, which to me is Q3 (4th calendar quarter). Last Q3 Nintendo shipped 1.2 million units to the Americas. If they beat that by more than 30 % (or say 66 % to 2 million units) I will regard Reggie's statement as vindicated.

When I said "those" I was talking about any and all units that are sold to retail, but not yet sold to consumers. The lingo would be "in the channel" I guess. I started calling them "shelve units" in a vain effort to get the point across to more people. Looking at the 360* and the PS3 I think that 1 million Wiis should be in the channel at any time to secure good supply. I think companies often measure the channel inventory in weeks, and something like 4 or 6 weeks worth of Wii sales should be in the channel at any time. This has obviously not been the case so far (outside of Europe), as vgchartz and Nintendo figures were matching almost 1:1 in July.

* Last Holiday season, Microsoft even managed to stuff the channel with more than 2 million units of inventory without inducing fire sales and exploding warehouses showering the landspace. 1 million Wiis in the channel would secure unrestricted supply for consumers.