Console Wars - the revenge

[UnOrthOdOx]

Originally posted by Asher

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.

I'm not entirely sure, but is the 360 making money yet? I'm fairly sure the PS3 still is losing money on each console sold. So the argument most certainly is there whether you want to see it or not.

We all know what JIT manufacturing is. Wii probably uses it. I know the 360 and PS3 use it.

only probably for the Wii, but you know on the others? Yet, your also saying how the 360 flexes it's manufacturing to sell off stock, a concept specifically against JIT manufacturing. So which is it?

It does not at ALL preclude the simple fact that Nintendo could have ordered way more.

Maybe. Depends on what their contract was for, and what they expected sales wise.

They could have signed up additional manufacturers, as Sony and Microsoft have.

Again, what's their contract? I don't know. And signing up additional people adds more cost, and a potential need to warehouse. If Nintendo itself is subscribing to a JIT business model, they're goal is to have the Wii's on store shelves, and NOT in their warehouse at all. Minimal warehousing. Yes, it lessens your ability to react to peaks in sales, but it also saves a considerable amount. Is it worth it? I don't know.

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.

That is becaust Flextronics uses JIT to meet their order with Xbox, yes. This would be idiotic not to. They manufacture, and should thus perform their business most efficiently, as JIT does.

While I appreciate your attempt to claim knowledge dominance here since you worked in manufacturing for Honeywell

Nope, I was an end-customer for manufacturing at 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!

Yes, the manufacturers all are going to use JIT. But PS3 and Xbox folks are most likely not using JIT when it comes to getting the things to the market. They likely have warehouses set up to respond to peak demands, because they need more units in homes ASAP to make more money. I'm willing to bet the Wii, however, is using a bare minimum of warehousing to maximize it's profits. I'm not saying it's the smartest thing they possibly could do, but it is a proven business model out there.

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.

[lord of the mark]

Originally posted by 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.

we also know their component manufacturers in Taiwan say they cant make the chips fast enough.

http://www.digitimes.com/systems/a20070816PD217.html

oops, bad link, go via here

http://gizmodo.com/gadgets/shortages/chip-shortages-force-nintendo-to-delay-expanding-wiis-290652.php

[Asher]

Originally posted by lord of the mark
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. .

Link to that thread? I vaguely recall it, but not anyone agreeing with you.

[Asher]

Originally posted by UnOrthOdOx
only probably for the Wii, but you know on the others? Yet, your also saying how the 360 flexes it's manufacturing to sell off stock, a concept specifically against JIT manufacturing. So which is it?

They're not contradictory. When I refer to JIT, I'm referring to the manufacturing process specifically. They use JIT to control production costs. It has no bearing at all on if they produce too much and need to warehouse them for a bit. MS' contracts are yearly with quarterly purchase targets, according to "Inside the Xbox". If they overestimate one quarter, the next quarter they ask for less. But these still use JIT manufacturing...

Again, what's their contract?

The point is they HAVEN'T added new contracts.

Yes, the manufacturers all are going to use JIT. But PS3 and Xbox folks are most likely not using JIT when it comes to getting the things to the market.

No, they aren't. And it'd be stupid to, because the console market sales are all about peaks and valleys.

[Asher]

Originally posted by lord of the mark


we also know their component manufacturers in Taiwan say they cant make the chips fast enough.

http://www.digitimes.com/systems/a20070816PD217.html

Why do you think MS has multiple suppliers?

Nintendo's sticking with 1 supplier for everything. They're victims of that one supplier's manufacturing.

This is why I've said -- repeatedly -- that Nintendo needed to sign up more manufacturers. IBM can't make enough CPUs? Bring in contract semiconductor manufacturers like TSMC and UMC. That's exactly what MS did -- both IBM and TSMC make the CPU. Both NEC and TSMC make the GPU. For instance...

They've had over a year to do this. They haven't. So, it's gross incompetence and complete lack of faith in their own product, or a strategy. Your pick.

[Wiglaf]

The Wii is really still selling out? What a hot item!

I see that they go for $554 on Amazon. Nintendo is probably constraining supply but this is over the top, isn't it? For people to be buying wiis for hundreds of dollars in the key holiday season and nintendo not seeing any of that money?

[lord of the mark]

Originally posted by Asher

Why do you think MS has multiple suppliers?

Nintendo's sticking with 1 supplier for everything. They're victims of that one supplier's manufacturing.

This is why I've said -- repeatedly -- that Nintendo needed to sign up more manufacturers. IBM can't make enough CPUs? Bring in contract semiconductor manufacturers like TSMC and UMC. That's exactly what MS did -- both IBM and TSMC make the CPU. Both NEC and TSMC make the GPU. For instance...

They've had over a year to do this. They haven't. So, it's gross incompetence and complete lack of faith in their own product, or a strategy. Your pick.

I really doubt that way back in January they thought the sales would continue at the pace they have.

[Asher]

So you choose option A: lack of faith.

[LordShiva]

Originally posted by Asher
1) Nintendo is intentionally keeping demand higher than supply for PR reasons

This is pretty much it, though they won't admit it. By keeping supply just under demand, they sacrifice a little revenue for a whole lot of marketing dollars that other people spend for them. With retailers falling over themselves to get shipments of consoles, Nintendo can make their allocations conditional on whether the retailers feature the Wii prominently in their flyers or other advertising, and keep their shelves stocked with Nintendo software.

[Asher]

Bingo

[lord of the mark]

Originally posted by LordShiva
With retailers falling over themselves to get shipments of consoles, Nintendo can make their allocations conditional on whether the retailers feature the Wii prominently in their flyers or other advertising, and keep their shelves stocked with Nintendo software.

I check the local circuit city and best buy flyers pretty regularly, and until the last week or so, they didnt even mention the Wii (the HW, of course they list several games). I assumed this was cause they couldnt keep them in stock and had no reason to advertise them. They almost always prominently mention some 360 or PS3 bundles.

[Asher]

Well, that explains why they can't keep them in stock then.

[lord of the mark]

UK SW sales

http://www.charttrack.co.uk/index.jsp?c=p/software/uk/latest/index_test.jsp&ct=110032

Title Format Label Publisher
1 DR KAWASHIMA'S BRAIN TRAINING DS NINTENDO NINTENDO
2 MARIO & SONIC AT THE OLYMPIC GAMES WII SEGA SEGA
3 MORE BRAIN TRAINING FROM DR KAWASHIMA DS NINTENDO NINTENDO
4 ASSASSIN'S CREED XB360 UBISOFT UBISOFT
5 SUPER MARIO GALAXY WII NINTENDO NINTENDO
6 CALL OF DUTY 4: MODERN WARFARE XB360 ACTIVISION ACTIVISION
7 NEED FOR SPEED: PROSTREET PS2 EA GAMES ELECTRONIC ARTS
8 BIG BRAIN ACADEMY: WII DEGREE WII NINTENDO NINTENDO
9 HIGH SCHOOL MUSICAL: SING IT! PS2 DISNEY INTERACTIVE STUDIOS DISNEY INTERACTIVE STUDIOS
10 THE SIMPSONS GAME PS2 EA GAMES ELECTRONIC ARTS

[Asher]

If I were from the UK, I'd be terribly embarrassed.

Mario & Sonic at the Olympic Games at #2? Really?

http://wii.ign.com/articles/837/837349p1.html

The gameplay is lacking in the fun department, the controls are either overcomplicated or hugely repetitive, and the presentation is a mixed bag. On the upshot, there are a few mini-games that unlock Olympic trivia - wait. Is that an upshot? I don't like the Olympics, so not really. But you might, so ...maybe? The mini-games are really simplistic; just versions of whack-a-mole (with goombas replacing moles), versions of memory and counting games and a strange ball-sorting game. If you have a real penchant for inflicting pain on yourself, you can listen to the midi soundtrack too.

Every half an hour, you see, a kiddie-friendly screen pops up with Toad sucking on a juice box and a sleepy looking Chao with the text "it's time to take a break." Patronising? Yes. Good advice? You bet. Just make sure it's a permanent one.

5.2/10

Looks like the Wii has the market cornered of dreadfully awful mini-games. And the masochistic British people buy it.

Though it is amusing to see Assassins' Creed continue to outsell the Nintendo flagship...

[DrSpike]

Originally posted by Asher


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".

Sorry but this is a discussion forum, and this post is uncalled for. The argument you are presenting may well be correct but it's hardly gospel just because you have a decent understanding of the industry (as do others here). If your argument is strong you should be able to address counterarguments through debate not through this rubbish.