It’s 2006. Nintendo released a console very few believed in. Suddenly one person tries it out at Best Buy. Three days later, you can’t find it… anywhere. Every shipment arriving at every store is gone before they can get the consoles on store shelves. Wii Sports and Twilight Princess begin to form a powerhouse combination. Nintendo clearly didn’t anticipate such high demand. Rumors start flying Nintendo is holding stock back on purpose to create demand. Whatever the case may be, it was the start of Nintendo’s best selling home console ever.
Except, we now have some evidence that it had nothing to do with demand—Nintendo was losing money on the Wii at launch, and wanted to mitigate the losses by not offering the full stock until the price of the parts dropped.
“Nintendo, for example, supply-constrained the Wii in its launch window; that strategy was not in order to create sales hype, as it was often accused of, but rather because the device was losing money on each unit sold. Had Nintendo fulfilled demand completely, it would have taken a huge operating loss. By waiting, it got to hang on for manufacturing costs to fall before supplying the demand in the market.”
What do you think?