Would Nintendo Risk A Hail Mary Strategy To Meet Insatiable Wii Demand (NTDOY, SNE, MSFT) (7974.JP)

If there is one thing you still hear about as being immune from a weak consumer and from any Christmas spending concerns it is that Nintendo’s Wii is in such high demand that the darned things are extremely difficult to find.  Apparently everyone in the Western hemisphere has decided they want to be "Wii-nies."  Nintendo’s (OTC: NTDOY) stock has come back from the grave

The WSJ just reported today that Nintendo has been far too conservative in its forecasts and in its supply and demand models.  That is likely because it wasn’t all that long ago that Nintendo was thought of as a dead system when rivals Sony (NYSE: SNE) were going gangbusters with the Play Station franchise (PS3 excluded now) and the Microsoft (NASDAQ: MSFT) Xbox franchise doing as well as it has.

What is becoming more than obvious is that despite the company remaining focused on cash flows and being extremely conservative, this video game system hasn’t just done better or even far better than the company expected.  It is continuing to be a shining star and demand is out-pacing what it can currently even come remotely close to supplying.  The company already said it was trying to ramp up manufacturing. 

But here is our suggestion: go take your designs to more outsourced manufacturing companies (or EMS players) and see what they can do for you.  Unfortunately, with there being only 18 days to Christmas they won’t be able to fill the gap in time for the holidays.  But one thing that the company could do is try offering a voucher guarantee if they can secure more manufacturing.  It is of course only an option if they can land more outsourced manufacturing.  It’s also a risk because if they fail to deliver it will be a huge round of negative press about Nintendo being unable to live up to promises and it ruining many holiday dreams (remember we’ve all been a bunch selfish children that want what we want now).  But it would also keep its customers that just can’t find the systems from automatically buying a Playstation or an Xbox 360 because they wanted a new system.

I called the two GameStop stores I go to for games (30’s and 40’s somethings can be gamers too) and neither store has any Wii’s in stock and both said they don’t think any of the local GameStop’s have any Wii’s in stock.  One told me that they won’t know if they get any in before Christmas.  There is just one small problem with the voucher idea.  The problem is that both GameStop’s told me they are not allowed to even have a waiting list and they are first come first serve.

When American consumers want to buy something and can’t, let’s just say they aren’t exactly great at saving and waiting.  They just buy the competitors’ products.

Jon C. Ogg
December 7, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.