Console Wars - the revenge

[Asher]

Originally posted by lord of the mark


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.

It's fine to suggest alternative, it's just a waste of everyone's time to have someone with admittedly no knowledge of the industry positing bull**** in the guise of an "alternative explanation".

[UnOrthOdOx]

Originally posted by Asher

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.

Alright.

I'm not sure how the Nintendo contract, or microsofts, or any gaming contracts, for that matter, are set up.

I do know how the likes of Honeywell, Thiokol, and Boeing are set up. And I can tell you, it's not nearly so simple as scaling back production and selling through the inventory.

Storing the things is not a cheap thing either. It's overhead. It lowers the amount of profit each Wii would make.

I can already make a reasonable guess that Nintendo has taken a just-in-time manufacturing approach to the Wii. Make just enough, just fast enough, use minimal warehousing, and minimal overhead, thus maximizing profits.

Bunch of college kids came in as supervisors when I was at Honeywell and did the same thing to their production facilities. As someone much further down the line needing components, I often detested the practice as what I needed to complete my job wasn't quite ready, and I had to be doing MY job "just in time" as well, instead of being able to get it done ahead of time. However, I also conceded that the numbers did not lie, and it did save the company quite a bit.

This is a proven business model that is quite popular in Japan. No special PR move needed.

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.

I'll have to take your word for that. All the numbers I've seen were based on the major retailers.

[lord of the mark]

Originally posted by Asher


it's just a waste of everyone's time to have someone with admittedly no knowledge of the industry

This thread isnt a timewaster period? What precisely is the real world benefit to anyone of establishing the truthiness of the "Nintendo is the eevil" meme here, even if you were succeeding at doing it? Ya think anyone here who actually wants to buy a Wii is gonna not do it cause of your posts?

[UnOrthOdOx]

Originally posted by lord of the mark



Apolyton as a whole isnt a timewaster period?

fixed.

[Asher]

Originally posted by UnOrthOdOx
Alright.

I'm not sure how the Nintendo contract, or microsofts, or any gaming contracts, for that matter, are set up.

I do know how the likes of Honeywell, Thiokol, and Boeing are set up. And I can tell you, it's not nearly so simple as scaling back production and selling through the inventory.

It is for MS and Sony.

There have been articles over the years leaked from suppliers showing MS is scaling back production on a quarterly basis if they have excess stock, then bumping up orders when not. Eventually these consoles are going to sell through, making a bit too much now just means you can sell them later with minimal cost.

The benefits (far higher sales during a period of hype and insanity about the product) far outweigh the bad (not enough consoles to go around, for OVER A YEAR). Unless, of course, this is part of your PR strategy...

I'll have to take your word for that. All the numbers I've seen were based on the major retailers.

Care to cite? The Nintendo numbers weren't sourced as major retailers...

[Asher]

Originally posted by lord of the mark
This thread isnt a timewaster period? What precisely is the real world benefit to anyone of establishing the truthiness of the "Nintendo is the eevil" meme here, even if you were succeeding at doing it? Ya think anyone here who actually wants to buy a Wii is gonna not do it cause of your posts?

No, I'm not here to discourage people buying the Wii (I'm not even sure how this remotely connects with me discussing Nintendo's business strategy, so I'm going to instead point that this here is an example of you pulling your reasoning out of thin air).

I think that discussing business/manufacturing strategies is interesting and can be informative for those people who don't know a damn thing about the industry. But when those people take it from a discussion based in reality to one based in fantasy with rather random, baseless comments it becomes spammy.

UnOrthOdOx is contributing more on the basis that he's at least grounding his arguments in reality. Even though it's beyond silly to assume Wii production is comparable to a 747's production, and go from there...

[lord of the mark]

Originally posted by Asher

But when those people take it from a discussion based in reality to one based in fantasy with rather random, baseless comments it becomes spammy.

We all have our opinions on what comments are random, etc. In general, its best to respond directly to things one thinks dont make sense, rather than trying to charecterize posters.

Im still wondering if there is any particular evidence that this is a PR strategy, rather than a market segmentation strategy.

[lord of the mark]

Originally posted by UnOrthOdOx


fixed.

nah. If youre interested in info about Civ games, this is really still one of the best places to go, AFAIK.

If you want an intense discussion of different gaming platforms, though, with folks with deep industry knowledge willing to argue lots of different positions, there are several better places to find it.

[UnOrthOdOx]

Originally posted by Asher

It is for MS and Sony.

There have been articles over the years leaked from suppliers showing MS is scaling back production on a quarterly basis if they have excess stock, then bumping up orders when not. Eventually these consoles are going to sell through, making a bit too much now just means you can sell them later with minimal cost.

MS and Sony are also encouraged to sale as many as possible as fast as possible, for the bulk (all?) of their income comes from Software sales as opposed to Hardware sales.

The benefits (far higher sales during a period of hype and insanity about the product) far outweigh the bad (not enough consoles to go around, for OVER A YEAR). Unless, of course, this is part of your PR strategy...

Ok. You win. It's far more likely Nintendo is just using a superior PR strategy, purposely limiting supply, than it is they are subscribing to just-in-time manufactureing. A well documented, successfull business model that was originally developed, and quite popular, in Japan.

Either way, there's no denying it's worked.

Care to cite? The Nintendo numbers weren't sourced as major retailers...

Local news. So either they said it wrong, I heard it wrong, or you're wrong that the numbers they claim are not retail sales.

Like I said, I'll take your word since I don't really follow the numbers around like you seem to.

[Asher]

Originally posted by lord of the mark
We all have our opinions on what comments are random, etc. In general, its best to respond directly to things one thinks dont make sense, rather than trying to charecterize posters.

The comments have been addressed for months here. The problem is they never end, and they're virtually always pulled from thin air...

Im still wondering if there is any particular evidence that this is a PR strategy, rather than a market segmentation strategy.

Seriously? You think this is a "market segmentation" strategy? I'm sure you're familiar how market segmentation works. Having 1 SKU with 1 price with 1 pool of games is not a segmented market.

You know what a market segmentation strategy is? Xbox 360 Arcade vs Xbox 360 Premium vs Xbox 360 Elite.

Arcade is for casual players, Premium is for game players, Elite is for media + game players.

You know what isn't a market segmentation strategy?
Wii for $249. Wii for $249. Wii for $249.

The whole "Group A" vs "Group B" nonsense also doesn't make any sense. At all. I don't even know where to begin. Yes, there's different types of consumers that you may pigeonhole into a "group" if you so choose, but how does that reasonably apply to Nintendo's inability to produce consoles at a reasonable rate?

[Asher]

Originally posted by UnOrthOdOx
MS and Sony are also encouraged to sale as many as possible as fast as possible, for the bulk (all?) of their income comes from Software sales as opposed to Hardware sales.

This is patently FALSE. The 360 and PS3 drop in production cost FAR faster than the Wii will. The more that sell initially, the more money they LOSE.

The Wii, on the other hand, is pure profit from day one. The more they can sell at the highest price (launch price), the better.

The 360 and PS3 lose most money in the first years due to high costs. More sold = higher costs.

Ok. You win. It's far more likely Nintendo is just using a superior PR strategy, purposely limiting supply, than it is they are subscribing to just-in-time manufactureing. A well documented, successfull business model that was originally developed, and quite popular, in Japan.

We all know what JIT manufacturing is. Wii probably uses it. I know the 360 and PS3 use it. It does not at ALL preclude the simple fact that Nintendo could have ordered way more. They could have signed up additional manufacturers, as Sony and Microsoft have. There was a lengthy article in Wired years ago profiling Flextronics and how they can produce Xboxes so quickly and cheaply -- and yes, JIT was a recurring theme.

While I appreciate your attempt to claim knowledge dominance here since you worked in manufacturing for Honeywell, the simple fact is JIT is probably used across all three consoles. Especially given that the manufacturers for all 3 are dedicated manufacturers -- this is all they do!

Local news. So either they said it wrong, I heard it wrong, or you're wrong that the numbers they claim are not retail sales.

Like I said, I'll take your word since I don't really follow the numbers around like you seem to.

All of the sources trace back to Nintendo's press release. Nintendo's press releases -- unless they explicitly state a market research firm like NPD -- are always from Nintendo's perspective. 350,000 "sold" by them mean stores buying 350,000.

[UnOrthOdOx]

Originally posted by Asher
UnOrthOdOx is contributing more on the basis that he's at least grounding his arguments in reality. Even though it's beyond silly to assume Wii production is comparable to a 747's production, and go from there...

Manufacturing is manufacturing. Doesn't matter what you're making. The concepts are all the same in the end, if the application of them differs.

And, actually my time with Honeywell when I experienced the just-in-time concept, it was Fram, Pennzoil, Autolite, etc automotive parts. I happened to be in charge of a shipping facility that served the western US, Mexico, and canada.

They went to the damn just-in-time ****, lowering our inventories, closing warehouses, and such.

This particular business has predictable peak-sales times, at least similar in fashion to electronics around Black Friday. However, I'll admit there is the lack of the hype engine for a new product. Usually.

I hated JIT. We always seemed to be waiting for something from the manufacturing facility next door. But, the orders were always met, if not as quickly as my side of things would like. Especially at the peak times. We'ld run out of this or that, and occasionally have to back-order on some items.

Fortunately, I'm more in R&D these days. No more dealing with that crap.

[lord of the mark]

[QUOTE] Originally posted by Asher
Seriously? You think this is a "market segmentation" strategy? I'm sure you're familiar how market segmentation works. Having 1 SKU with 1 price with 1 pool of games is not a segmented market. [/q]

Its quite possible to have a market segmentation strategy thats not based on multiple SKU's. Any strategy based on taking advantage of different price sensitivities, or, in this case, different availability sensitivities of different groups of customers, is a market segmentation strategy.

The whole "Group A" vs "Group B" nonsense also doesn't make any sense. At all. I don't even know where to begin. Yes, there's different types of consumers that you may pigeonhole into a "group" if you so choose, but how does that reasonably apply to Nintendo's inability to produce consoles at a reasonable rate?

If you assume they can, cost free, adjust their production up or down without delay, then of course they should (PR aside) meet all demand, and ASAP. If you assume, as I and others here have, that there are fixed costs to increasing production, and that they expanded production over the summer, but not sufficiently to achieve weekly production equal to holiday season demand, then market segmentation provides a perfectly adequate explanation of why they would allow shortages in September and October, and then release product starting with black Friday.


So I take it you are saying that the logical strategy would be to increase production to precisely match holiday season demand, rather than hold inventory for the holiday?

Or, alternately, that they should have increased production, to BOTH match Sept - October demand, AND to stockpile inventory for the holiday surge?

Okay, I admit I can't counter that without detailed knowledge of their production contracts, etc.

[lord of the mark]

Originally posted by UnOrthOdOx


Manufacturing is manufacturing. Doesn't matter what you're making. The concepts are all the same in the end, if the application of them differs.

And, actually my time with Honeywell when I experienced the just-in-time concept, it was Fram, Pennzoil, Autolite, etc automotive parts. I happened to be in charge of a shipping facility that served the western US, Mexico, and canada.

They went to the damn just-in-time ****, lowering our inventories, closing warehouses, and such.

This particular business has predictable peak-sales times, at least similar in fashion to electronics around Black Friday. However, I'll admit there is the lack of the hype engine for a new product. Usually.

You think any of that matters? We had a thread awhile back, where we discussed transportation issues relating to consoles, questions of mode choice between sea and air. I, with "no knowledge of the console business" but considerable knowledge of transportation mode choice, was similarly dissed by he who knows all. Untill lots of folks chimed in on my side, IIRC. It doesnt matter how much experience you have with logistics management, you're not a HW/SW techies, ergo you're thoughts will be discounted. .

[Asher]

I don't know the details either.

What we do know is the Wii has been produced now for 16 months. What we do know is that it's been on sale for over a year. What we do know is Nintendo states themselves that they won't match demand with supply. What we do know is Nintendo's competitors in the market have been able to match demand with supply in rather short order (recall MS was way short in Nov 05 - Feb 06) but added new manufacturers and ramped up contracts with all of them to resolve this. In short order!

Putting all of these together, there are only two choices:
1) Nintendo is intentionally keeping demand higher than supply for PR reasons
2) Nintendo doesn't have faith in their own product's longevity

Take your pick.