Wii are All Sold Out, Sorry

We're headed into the holiday shopping season and this one will carry a familiar tune from Nintendo : shoppers looking to deck their dens with a new Wii may be out of luck. Again.

The New York Post reports another round of Wii shortages on tap during this year's fourth quarter, even as the company has sold 11 million of these consoles worldwide. Last year, I got it: the Wii craze took just about everyone by surprise. I spoke to a number of Nintendo executives who were all more stunned than the next that the game enjoyed the success it did.

But that was sooooo last year! Here we are a year later and this company still can't accurately forecast demand? It stands to reason that with new accessories on the way, like the Zapper and the upcoming Balance, not to mention game developers dragging the Wii into more hard-core gaming with the ultra-violent Manhunt 2, that the company could count on, at the very least, ongoing strong demand; let alone a spike in new demand.


Instead, the company may once again be setting itself up for disappointment, both with consumers and its shareholders. Last year, the success was a surprise. This year, the success should have been anticipated, planned for, and enjoyed. Again, by both consumers and shareholders.

Last year, the shortages weren't that big of a deal. (Except of course if you were hoping for a little Wii under the tree or near the Menorah.) Nintendo appealed to such a wide swath of the market, and Microsoft and Sony were too busy competing against each other to really notice. Until it was way too late and Nintendo suddenly became the darling of the console crowd.

This year, it's a decidedly different story: Microsoft and Bungie finally got Halo 3 out the door and sales are skyrocketing. Not just for the gaming title, but for Microsoft's xBox 360. In fact, Microsoft says console sales have nearly tripled since Halo 3 came out. That makes sense since, as I've written before, better than 2 million xBoxers hadn't traded up to the new xBox 360, apparently waiting for Halo 3's release to encourage them to do so. If Nintendo had hoped to attract any of those folks, those hopes may now be dashed.

In other words, Nintendo may be doing to itself what Microsoft and Sony couldn't do together: slow the Nintendo juggernaut. Trouble is, the slowdown may occur at just the right moment for Microsoft, and the worst possible moment for Nintendo.

You'd like to think a company could figure out a way to capitalize on its momentum. But the stars might be aligning for Microsoft.

Funny how Nintendo's two new highly anticipated accessories are so aptly named for the broader issues facing the company: the Zapper as Nintendo risks zapping itself by shooting itself in the foot; and the "Balance" as the company desperately tries to come up with the right balance between manufacturing and consumer demand.

And don't count out Sony, either. Jeff Pritchard wrote in last week with the subject heading, "You're Wrong," when I talked about the impending success of Microsoft thanks to Halo 3, and didn't give enough props to Sony. He says, "What MUST be noted is that the last generation consoles have all been abandoned by their makers except for one: the Playstation 2. It amazes me that you can give so much credit to Microsoft who has lost $5 billion in the video game market and then turn around and bash Sony who is in the green and still has a console that is outselling all others. (Sony) can afford having a slow start with the PS3 because they are still riding the wave of the PS2 success. Microsoft (as well as Nintendo) have both completely dropped support for their prior machines because they see no further potential in that area. The part that kills me is when the PS3 does pick up steam and start matching the success of the PS2, you’ll talk about how you saw it coming all along and why Sony is so great. Why not be bold and take that stance now instead of just feeding info to readers that they want to hear."

All good points, Jeff, except for this: Sony is riding the success of PS2 BECAUSE PS3 hasn't taken off yet. It's not a nod to long-standing customers. It doesn't have a choice. I'm talking momentum here. Microsoft and Nintendo have it; Sony doesn't. And it all comes down to price. Yes, Microsoft has taken a bath on xBox, though Robbie Bach, the president of the unit, tells me he absolutely stands by his plan to get xBox and his entertainment and devices division in the black by next year. That won't erase the losses incurred up until now. But it's a start. Microsoft still loses money on every xBox sold. But Microsoft's $76 per box loss pales in comparison to the whopping $306 the experts say Sony loses on every PS3 it sells. Microsoft's problems seem to be ebbing. Sony's seem to be flowing.

Again, momentum. Microsoft has it; Nintendo risks losing it; Sony is desperately trying to recapture it.

Oh, and you won't find me saying I saw PS3's momentum matching the success of PS2 coming. I can't see that far ahead.

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