Price cuts have never made all that many inroads into the demographic we now call the Blue Ocean. One might claim that this generation is different, except that the 360Arcade's price cuts haven't given the 360 a significant boost there either, even though the Arcade became the 360's most popular model.

This would seem to imply that price is not, and has not been, the factor that keeps the Blue Ocean away from older systems and from the HD consoles. Being cheap just isn't enough.

People often forget the DSi, which is $179. What would the Wii look like being only $20 more than its lower-tiered handheld? The DSi would in turn look overpriced. It would have to be DSL @ $99, DSi @ $149, Wii @ $199. Even that is cutting it close, so the Wii should be $229 or stay at $250 bundled with the whole Wii line except for Wii Fit and an additional controller.

 Bundles are a possibility, but only as long as the perceived value is still high enough to justify the price.  Actually, Nintendo had a curious little event in their history with the NES: it did get a price cut, in spite of being a Blue Ocean product, but still survived in spite of that without harm.  The reason for this is simple, however: its original price was not mass-market-friendly and the original bundles were also not very appealing.  The original NES options were Deluxe Set with Duck Hunt, Gyromite, 2 controllers, and R.O.B. for $250, and the Control Deck set with Super Mario Bros and 2 controllers for $200.  The value was not there for most consumers, however, and the NES did not take off until these two bundles were phased out in favor of the Basic Set (one controller, no games, for $100), the now-classic Action Set (Super Mario Bros + Duck Hunt, 2 controllers, for $150), and the Power Set (as above, but also with World Class Track Meet and the Power Pad for $200).

 In other words, re-bundling a Blue Ocean product can in fact spare that product from self-destruction of too high an initial price point by way of masking its past mistaken price with a new face.  However, the NES did not drop below its $100/$150/$200 set prices until after the SNES had come out and the NES was considered outdated.  Even in 1990, the Action Set still cost $150.

 This scenario is very unlikely to happen with the Wii.  Its initial price point of $250 has proven wildly successful, and resulted in a very high rate of return for Nintendo.  As with the NES from 1988 onwards, the Wii should be able to keep its price point consistent by way of new and diverse system-selling software to draw in reluctant customers.

I think Wii Vitality is underestimated. If Nintendo can hit the 'not interested in video games' market Wii could see stellar sales again.

As bizarre as Vitality seems to me I can't help but look at Wii Fit and think Nintendo knows exactly what they're doing.

You know I see people say the wii is overpriced. Wait wha? Yeah that's how I feel. So its been overpriced for 2 yeara now wow and it keeps selling. The wii is doomed! If its anyone who is doomed irs one of the HD twins. Though who will fall.....

Price cuts are a Red ocean strategy because of their reason, not their result. Companies will cut price when in competition. If you know your history, companies in the turn of the 20th century would drastically lower their prices to beat out their competitors and then jack them up when they were the only ones in the market. Firms cut price when they are competing. Otherwise, they won't mind a higher price to increase revenue.

Nintendo cutting price would mean they are in competition with Sony and Microsoft. The byline of the Blue Ocean Strategy is "Make your competition irrelevant." Nintendo is not going to compete with either Sony or Microsoft. By making compelling software, they are keep a high profit margin and attract costumers in a Blue Ocean way.

If they are cutting their price as a reaction to 360 and PS3 price cuts, then it is a red ocean.

The fact is, Sony and Microsoft are losing money with their price cuts in a trade off for more market share. They can do this because they have gaming "divisions" within their overall company.

Nintendo is STRICTLY a game developer and publisher, so they can not risk losing money in the same way. They will always go for profit over market share.

I feel like their focus right now is to graduate casual players, so to speak. With WSR and WF+, they seem to be advancing beginning players to become more seasoned (perhaps not core, but active).

Yeah pretty much.

I think Nintendo is only going to do one price cut this whole generation, that it will come at the start of the next fiscal year, and as Sky Render suggested it will be disguised as a rebundling - that is to say I think in the spring they will announce a new bundle including WSR and WM+ for about $200.

Or as I wrote, when the Wii is competing with the successor. Only then will Nintendo feel the price can be dropped, since it's to sell more systems in the face of the new one.