I am one of those unfortunate souls who wanted a Wii for Christmas but was too slow to make it known to my family to make a purchase while they were still in stock. Now that it is creeping toward the end of February, to my amazement you still can't find one on line (at the list price) or in the stores.

Ninendo's stated reason for the lack of stock is underestimating demand. Considering that the product was launched back in 2006 and has had one Christmas season under its belt, this is hard to imagine.

I recently read a blog post on CNet.com by Don Reisinger that questions how a company of Nintendo's prominence is capable of missing a forecast as significantly as they have. He feels that in fact it is not a function of poor planning but in fact done purposefully in order to keep the buzz at the forefront of the market thereby artificially elevating demand. "Historically, vendors cut prices to dump stock. But today, these companies may be trying to hold back shipments in an attempt to increase demand and sell even more consoles than imagined." It is a very plausible idea except for the fact that the lack of stock is very wide-spread and the period of unavailability is long lasting. This could prove to be counter productive especially as the buzz begins to wear and if the economy continues to languish. A recent article in PC Magazine is predicting that by the end of the year there will be an oversupply of game consoles. 

In the world of Demand and Supply, the Nintendo Wii scenario is an interesting case. If I was trying to manage supply so that it stayed just behind demand in order to maintain low inventories and market buzz, I would find a way to ship smaller quantities to retailers more often there by creating this "we just ran out but more are due to come in next week" scenario in order to keep people engaged. Now if you ask a retailer the stock situation, you get the answer "I don't know" which in many cases may result in the consumer purchasing a competitive console.

I would also create an on-line voucher system for a small fee to allow consumers to reserve a console even if the shipment could take weeks to arrive. This holds the consumer and eliminates their need to call and go from store to store to find a console thereby justifying the cost of the voucher. It is also a nice way to potentially generate some revenue if managed appropriately.

Because none of these things are happening as I see it, I do believe that more likely Ninendo partially tried to control supply but did a very poor job forecasting demand which was then complicated by not having a supply chain flexible enough to meet the increase in a rapid manner. This has caused Nintendo and its partners to lose millions upon millions in console revenue and additional revenue from game sales.

So the morale is under forecasting demand and then having an inflexible supply chain to meet the requirement costs you more than the benefits of some market buzz.