May 7, 2007 8:30 AM PDT

Nintendo: Wii have a supply problem

The Wii is way more popular than expected.

So popular that six months after the game console's launch, Nintendo CEO Satoru Iwata is addressing shortages at company financial briefings.

"We are sorry that we were unable to sufficiently forecast this kind of demand," Iwata said in a question-and-answer session posted to the company's site late last week, acknowledging a supply shortage of the Nintendo Wii.

Nintendo's original distribution plan for the Wii, Iwata said, had been to sell the console through a variety of retail outlets alongside video game stores to reach a greater market penetration. That plan is currently off the table, he said, because "(we) have to supply enough to meet the demands from our existing customers before we try to expand to new outlets."

One thing choking Nintendo's Wii supply is an apparent production bottleneck.

Satoru IwataSatoru Iwata

"Making a significant volume of the high-tech hardware, and making an additional volume, is not an easy task at all," Iwata said. "In fact, when we clear one bottleneck for a production increase, we will face another one."

To deal with the Wii's supply issues, Iwata said the company's Mario factory is increasing production of the console and that a "small increase" is expected in retail outlets starting this month.

Iwata also slammed critics of the Wii and DS who have said they are not truly next-generation devices.

"It looks like some people are (saying) Nintendo is not incorporating state-of-the-art technologies into its products," Iwata said. "We are using state-of-the-art technologies to realize the compact-size Wii console with low power consumption."

Iwata said more premium content would be coming to the Wii channel network in the wake of the successful Virtual Console, where classic games from past Nintendo platforms can be downloaded on the Wii.

"When Nintendo thinks we have a channel which is worth asking our customers to pay for, we are in a position to make a business out of it," he said. "I am not saying that the existing services that we are offering for free of charge today will suddenly become a paid service."

Iwata also denied the possibility of expanding Nintendo's software into the similar market of mobile-phone users or that the mobile-phone market is a threat to the Nintendo DS.

He said that although there were some 90 million mobile-phone users in Japan, these cell phones work across a variety of different architectures, and each requires different game software.

With about 20 million owners worldwide, the DS might have a much smaller user base than that of cell phones internationally, but the former has a unified software platform.

"Many people have been predicting (for the last five years) that mobile phones would eat up the portable game machine business," Iwata bemused. "If their predictions were right, we would not have today's situation...In the case of the DS, when there are 16.5 million DS hardware units in Japan, software can become a million seller if just one out of 16.5 hardware owners have purchased the software."

Iwata was also asked if Nintendo might hire Ken Kutaragi, creator of Sony's PlayStation console line, in light of his stepping down last week to "pursue other projects."

His response: "I don't think we will do that."

Emma Boyes of GameSpot UK reported from London.

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Nintendo Co. Ltd., Nintendo Wii, Nintendo DS, console, shortage

2 comments

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Does anyone know how long the current shortage (2010) is going to last?
Posted by knoonr (1 comment )
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Hey great article I'm using it for my Macroeconomics class in college.
Posted by cjrensh (1 comment )
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