Console Wars - the revenge

[lord of the mark]

Originally posted by Asher
Nintendo doesn't have ANY initial costs for setting these lines up, they would just need to sign a contract for X many consoles over the next year from them.

Which, again, they may be reluctant to do if they think quantity demanded (at the current price) is going to fall back to the existing level of production.

Anyway, Im not sure if Asher, who is now saying they have created the shortage for "business reasons" is acknowledging that a market segmentation strategy is as good an explanation as a PR strategy (assuming they ARE holding back supply)

[Asher]

Originally posted by lord of the mark
Which, again, they may be reluctant to do if they think quantity demanded (at the current price) is going to fall back to the existing level of production.

Anyway, Im not sure if Asher, who is now saying they have created the shortage for "business reasons" is acknowledging that a market segmentation strategy is as good an explanation as a PR strategy (assuming they ARE holding back supply)

A PR/marketing strategy is a business reason, the whole point is to sell as many consoles as possible....

I've been saying this the whole time, it's not something I'm "now" saying.

I'm not buying they're "reluctant" to do it. If they overestimate supply, then they just sit on the consoles and next year order less. No big deal.

But if what you're saying is true, that Nintendo thinks it's more likely that Wii demand drops dramatically, then shouldn't Nintendo fans be worried?

[UnOrthOdOx]

Did that article make the format of this thread go to hell for anyone else?

I'm sorry, but I'm not sidescrolling to read this thread. I'm too lazy.

Can we remove a couple of pictures off that bottom banner to fix the formatting? Please?

[Nikolai]

No sidescrolling here.

[DrSpike]

Originally posted by UnOrthOdOx
Did that article make the format of this thread go to hell for anyone else?

Yup.

[lord of the mark]

[QUOTE] Originally posted by Asher

R/marketing strategy is a business reason, the whole point is to sell as many consoles as possible....

I've been saying this the whole time, it's not something I'm "now" saying.

Uh yeah, PR is a business reason. I thought by saying business reason instead of explicitly saying PR, you MIGHT be accepting that it MIGHT be a market segmentation reason.

I'm not buying they're "reluctant" to do it. If they overestimate supply, then they just sit on the consoles and next year order less. No big deal.

Thats costly( both inventory carrying costs and storage/shrinkage costs). Even more so if their other supplier is moving down the experience curve, and they expect lower manufacturing costs as a result (which they can either take in even higher profits, or finally cut price) At this point I expect you to tell me how absurdly simple the manufacture of the Wii and all its components is, so that there are no cost reductions to be gained due to experience.

But if what you're saying is true, that Nintendo thinks it's more likely that Wii demand drops dramatically, then shouldn't Nintendo fans be worried?

I guess, Im not a Nintendo fan myself

[Asher]

so that there are no cost reductions to be gained due to experience.

These chips have been manufactured en masse since 2001. Point of diminishing return...

I find it puzzling you go out of your way to fabricate excuses for their behavior when none will do. What do you have to gain --are you a Nintendo shareholder?

[Nikolai]

By that logic you must be one of Microsoft's largest shareholders.

[Asher]

How so? I own the consoles and I play the games.

LOTM owns none of the consoles, plays none of the games, doesn't understand the market, and still participates in these threads -- most of the time defending/pimping Nintendo and pulling reasoning from thin air.

[DrSpike]

Don't discourage non-console owners from participating in these threads please. We need people to make jealous they can't play Mass Effect.

[UnOrthOdOx]

Thanks for fixing the formatting.

[lord of the mark]

Originally posted by Asher
How so? I own the consoles and I play the games.

LOTM owns none of the consoles, plays none of the games, doesn't understand the market, and still participates in these threads -- most of the time defending/pimping Nintendo and pulling reasoning from thin air.

I find the market interesting, following it is a hobby.

I do find the Wii phenomenon interesting.

And you seem to have missed the fact that Ive suggested Nintendo probably WAS holding back inventory. I provided an alternative explanation to he PR thesis however.

[UnOrthOdOx]

Originally posted by Asher
Nintendo doesn't have ANY initial costs for setting these lines up, they would just need to sign a contract for X many consoles over the next year from them. That's it.

Oooo...contracts...

That in itself IS a huge initial cost. We also don't know how their existing contract is formatted.

The fact that Nintendo still only has one supplier shows they've made no attempt at all to reasonably expand their supply. Further, the fact that they instantly tripled weekly supply for Black Friday shows they are even stockpiling some of the manufactured supply from earlier this year.

Not all of that can be attributed to Ninendo alone, however. Retailers themselves had to stockpile Wii's in order to have some on hand to honor their black friday adds.

I'm not buying they're "reluctant" to do it. If they overestimate supply, then they just sit on the consoles and next year order less. No big deal.

Again, holding on to extra Wii's would represent another huge cost. Easily in the millions.

But if what you're saying is true, that Nintendo thinks it's more likely that Wii demand drops dramatically, then shouldn't Nintendo fans be worried?

No, Nintendo is running off a different business model.

Initially the Xbox360 was losing money on every console sold. (maybe still, don't know for sure). They make their money off software sales. So, the point is to sell as many as quick as possible, get them in the homes, and thus boost your software sales ASAP.

Nintendo, on the other hand, is making money on the hardware itself. Sure, they COULD go sign all these other contracts, put up warehouses to hold extras, etc, but every time you do that, you're cutting the profit margin on each Wii sold.

It's a more cautious business approach, taken by a company without the cash to throw around that Microsoft has.

[lord of the mark]

Originally posted by Asher

so that there are no cost reductions to be gained due to experience.

These chips have been manufactured en masse since 2001. Point of diminishing return...

I find it puzzling you go out of your way to fabricate excuses for their behavior when none will do. What do you have to gain --are you a Nintendo shareholder?

Im just trying to understand whats going on. The only way to do that is to propose, and test, alternative explanations.

Thats the way Ive always thought of the search for truth

X did Y. Thats cause of P. Well COULD it be cause of Q? No, it couldnt be cause of Q. Ah, then it MUST be cause of P.

If proposing an alternative explanation of the phenomenon is consider ipso facto a proof of bias, then it becomes impossible to explore all alternatives, and thus impossible to prove the first explanation.

[Asher]

Originally posted by UnOrthOdOx
Oooo...contracts...

That in itself IS a huge initial cost. We also don't know how their existing contract is formatted.

It's not a big deal at all. You order too much, you scale back orders for the next interval and sell through your inventory.

Not all of that can be attributed to Ninendo alone, however. Retailers themselves had to stockpile Wii's in order to have some on hand to honor their black friday adds.

It absolutely can. Nintendo's bragging figures about how many were "sold" during Black Friday are 100% Nintendo shipped numbers. The real sales WERE likely higher due to stockpiled consoles on the retail side.

No, Nintendo is running off a different business model.

Initially the Xbox360 was losing money on every console sold. (maybe still, don't know for sure). They make their money off software sales. So, the point is to sell as many as quick as possible, get them in the homes, and thus boost your software sales ASAP.

Nintendo, on the other hand, is making money on the hardware itself.

Yes, all the more reason for them to sell the consoles as quickly as they can while the hype is there, right? Unless it's a calculated move to maintain the hype...