Here is a story that appears today about Nintendo, the Wii, and what some analysts think will be the demand for it in the future. Currently trading at 76 and change.
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From:
http://biz.yahoo.com/ibd/071207/tech01.html?.v=1
Investor's Business Daily
To Wii Or Not To Wii Mostly A Moot Point
As Supplies Dry Up
Friday December 7, 5:56 pm ET
Patrick Seitz
Nintendo's hit video game console Wii is in short supply this holiday season. But the Japanese company insists it's making and shipping as many as it can.
Demand for the Wii (pronounced "wee") didn't slow down over the summer, so Nintendo says it wasn't able to build up an inventory for the holiday season. The device has proved popular with families because of its easy-to-use, motion-sensing controller.
Normally we would come into the October-November-December time period with a warehouse pretty well stocked with hardware," said George Harrison, senior vice president of marketing at Nintendo of America. "But we never were able to achieve that this year because we were shipping and selling everything that we received from overseas."
Nintendo has been steadily increasing production this year, he says. It's now at 1.8 million units a month, but that output has to be divided worldwide.
The company originally expected to sell 14 million units for the fiscal year ending March 31. It has twice upped the forecast, to the current 17.5 million.
The Wii debuted in November 2006 and has sold 13.2 million units worldwide as of Sept. 30.
It's outselling more-sophisticated game consoles from Microsoft (NasdaqGS:
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Plus, Nintendo makes money on every Wii unit it sells. By contrast, Microsoft loses money on the Xbox 360 as does Sony with its PlayStation 3 because of their high-end components. Microsoft and Sony aim to make their profits by selling games.
"We expect the demand for Wii to continue into January, February and March," Harrison said. "We've got some big (game software) titles scheduled for the first part of the year. So it doesn't look like it's going to slow down anytime soon."
Nintendo has managed the supply of Wii consoles so they wouldn't sit long on store shelves, says Van Baker, an analyst with market research firm Gartner. The tight supply helps keep the buzz going for Wii, he says.
"There's enough inventory out there that people don't quit shopping for them. They may have to go to three or four different locations before they find one, but ultimately they do," Baker said.
But Brian O'Rourke, an analyst with research firm In-Stat, says Nintendo isn't intentionally holding back.
Nintendo's tight supply of Wii consoles comes from the fact that it isn't a manufacturing company, O'Rourke says. "They outsource their manufacturing. And qualifying contract manufacturers is a fairly time-consuming process," he said.
It takes Nintendo five months to increase production from the time it makes the decision to do so, Harrison says.
Demand for the Wii is likely to remain strong for at least the next two years, says O'Rourke. It is the cheapest of the current-generation consoles on the market and it appeals to a larger audience of casual gamers.
Gartner's Baker thinks Wii sales will be strong this Christmas but will cool by next holiday season.
"In general, it looks pretty positive for Wii this Christmas," Baker said. "The product's shortcomings are going to catch up with (Nintendo) by next Christmas."
The knocks against the Wii, Baker says, are that it lags in horsepower and graphics performance compared with rival consoles, and that it doesn't have as big a portfolio of games to play.
Most of the popular games for the Wii are Nintendo's own titles. Third-party game publishers aren't having as much success with the Wii, Baker says. The casual gamers who use the Wii don't buy as many game titles as the active gamers who use the Xbox 360 or PS3.
Those factors will make for a "relatively short run for this console," Baker said.
Other analysts disagree, saying Nintendo has expanded the audience for video games with its intuitive, easy-to-play game devices like the Wii and its handheld Nintendo DS.
"The Wii is going to be the best-selling console this generation," O'Rourke said. "There's very little doubt about that."
A big factor in Wii's favor is its cost. The Wii is priced at $250 and comes bundled with game software called "Wii Sports."
The lowest-price rival console is a stripped-down version of Microsoft's console called the Xbox 360 Arcade. It costs $279 and comes with five arcade games, including "Pac-Man Championship Edition." The standard Xbox 360 costs $349 and includes a 20-gigabyte hard drive, headset and network cable that the base version doesn't have.
Sony's PlayStation 3 costs $399 for a version with a 40-gigabyte hard drive and $499 for an 80-GB model. All PS3 models come with an integrated Blu-ray Disc drive for playing high-definition movies.
Nintendo expects a good holiday selling season thanks to the Wii and accessories like extra controllers and the new Wii Zapper for precision targeting. It also has first-party games like "Super Mario Galaxy" for the Wii.
Plus, the company's Nintendo DS handheld continues to rack up big sales numbers. The dual-screen game device with a touch-screen interface is popular with young people and adults, especially women.
The biggest traditional game titles this holiday season for the DS are Nintendo's own "Mario Party DS" and "The Legend of Zelda: Phantom Hourglass."
But adults are buying the $129 device to play brain-exercising games like "Sudoku Gridmaster" and "Brain Age."
Nintendo launched the DS in November 2004. It has sold 53.6 million units as of Sept. 30.
