Nintendo: Why Not Raise Prices?

Apple (AAPL) may have fumbled its initial roll out of the iPhone but no such misstep has befallen Nintendo Co. Ltd. (NTDOY.PK) when it introduced the Wii. Pricing came down on the iPhone early on leaving some egg, and rebate paperwork on the face of Apple. All may now be forgiven based on sales but the memory lingers.

Rumors of a price decrease for the Wii are not just exaggerated, they are unfounded.

NTDOY.PK has a lot on its plate including the approaching selling/key holiday season, and its launch in China along with its new interactive web-based features.

The company shipped about 3.9 million Wii units around the world in the last three months, according to its most recent earnings report, bringing the total since launch to 13.2 million units. This breaks down regionally as 5.5 million in North America, 3.7 million in Japan and 4.0 million in other markets.

According to a report on CNN Money, adding to the pressure are newly announced Wii accessories which include: a floor pad for exercise and dancing, a steering wheel for driving games, and a gun-shaped "zapper" for shooting.

It appears the pressure is to keep the shelves stocked not to lower prices.

The quote coming from Nintendo president Satoru Iwata says it all:

We're still focusing on how to meet booming demand, we're absolutely not considering a price cut.

NTDOY.PK 1-yr chart:

Disclosure: The author has no positions in the stocks mentioned.

Comments

[jonb:]

Nintendo won't raise prices because they cannot justify a higher price point for a less-than-cutting-edge unit. Sure, it's a fun device, but their entire market position is based on broad accessibility and casual gamer friendly positioning. Premium level pricing doesn't fit their market positioning.

2007 Oct 30 11:19 AM

[Julian Ivan...:]

The other way of looking at this is that its absolutely pathetic Nintendo can't manufacture enough of these to meet demand over a year after the initial launch. Its a very simple product using simple technology and standard components.

Nintendo should be ashamed of themselves for not sorting out their production. If this had been Apple, the "Street" would be apoplectic at such apparent incompetence and lost sales.

I love my Wii, I love Nintendo, but I think its an appalling testament to their lack of management that production issues still plague the device.

2007 Oct 30 01:34 PM

[boden11:]

If you're still looking for a Wii, why don't you try ebay Tommo? And seriously, considering the "success" of their previous system--the Gamecube and the fact that the Wii in pure technical muscle is even farther behind the 360 and PS3 than the Gamecube was in the last-gen it's not surprising that Nintendo wasn't expecting such a large amount of demand.

2007 Nov 09 08:49 PM