Analyst: Wii U Overpriced, Will Get A Price Slash

So about those Wii U details. Forget the specs and focus on the cost – $299.99 for the ‘basic’, and $349.99 for the deluxe. This is, I admit, far less pricey than I expected. It isn’t Wii cheap, but recall that the basic (‘core’) version of the Xbox 360, which didn’t even have HDMI capabilities, launched in 2006 for $299.00, and the Premium (with 20GB hard drive) cost $400. Inflation has bumped money values down slightly, making the Wii’s launch price, on the surface, seem like kind of a bargain.

But is it? It’s true that this looks cheap, but the economy is absolutely terrible right now, and people don’t have the same appetite, not to mention the finances, for a new device that costs hundreds of dollars, that they did back when the 7th generation started. And that, among other reasons, is why Wedbush analyst Michael Pachter thinks they’re charing too much, and that a price drop is inevitable.

“We think that Wii U’s price points are appropriate given likely demand from Nintendo’s core fanbase,” he said in a research note, “but believe that pricing will be too high to sustain demand given current competition from other consoles and tablets. In our view, Nintendo was smart to introduce the Wii U at higher price points in order to maximize initial sales from its core audience. We expect 1 – 1.5 million Wii U units to be shipped into the US by the end of GameStop’s fiscal year (January).”

So why the price drop? “We expect demand from Nintendo’s core fan base to remain high through the end of its March 31 fiscal year. Once initial demand begins to subside, we expect Nintendo to lower prices.” Admittedly, this is a slightly quicker timeline than the previous generation. Microsoft dropped the price of the premium Xbox 360 model to $349.99 in mid-2007, less than a year after the original launch. Which is to say, Nintendo won’t be overreacting, they’ll be doing what is expected, and assumed. Nothing to see here, move along, and wait until… when?

“We don’t expect a price cut until summer 2013, at the earliest, but do expect a cut prior to holiday 2013. Any prospective price cut will depend largely on competition, which we expect to materialize in the coming weeks.”

There you go. Wait until summer, 2013 to buy your Wii U. Chances are, it won’t have the same demand ‘problems*’ the Wii did.

*Clarifying: does anyone actually think Nintendo didn’t cannily make small numbers of Wii consoles to stoke demand and create the impression of an unstoppable juggernaut. Yeah…

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7 Comments on Analyst: Wii U Overpriced, Will Get A Price Slash

Matt W.

On September 14, 2012 at 3:36 pm

No, no one should think Nintendo made smaller numbers of Wii since the hard data is that it still outsold the 360 and PS3 by scales of 2:1 and 6:1 respectively almost every week for up to a year after it was launched. The fact of the matter is that the Wii was one of the fastest-selling consoles in history, and is STILL a juggernaut. All I got from this article is that the writer isn’t that fond of Nintendo. Seems pretty reasonable pricewise since you seem to discount the fact there’s a screen/processor/camera/motion sensor in every controller. No, the price sounds like a bargain if you actually put thought into it. The controller itself even plays TV. If that’s not forward-thinking I’m not sure what is. It’s a brilliant concept, and I anticipate a brilliant console as well if they’ve done it as right as it seems.

Matt W.

On September 14, 2012 at 3:52 pm

Also, you can’t just “forget the specs” when you’re buying something. The price doesn’t determine the quality or quantity of the goods.

And about the controller – it’s basically a console on its own, that’s probably be worth about $150 by itself considering the specs. So then, a $200 console? With better graphics than its more expensive predecessor and games for a more mature fanbase than ever before in the company’s history? Wish I could order one now.

user

On September 14, 2012 at 3:57 pm

“$200 console?”

You mean $300? Its not really $200.

Earnest

On September 14, 2012 at 5:20 pm

@MattW, I’m sure he’ll jump in himself, but I can attest that Ross is, in fact, a Nintendo fan.

@Ross Come on, Ross. Matt is right. The entire industry was skeptical of the Wii before it came out, and then it began selling like gangbusters. Furthermore, I would certainly have hedged on production if I were Nintendo and coming off of the Gamecube debacle. Creating the illusion of demand is a poor strategy because it means that you are not maximizing your profits. Remember Nintendo wasn’t increasing their prices (yeah, Walmart and others did sell overpriced “bundles”) which meant every person who couldn’t buy a Wii was potentially a customer they might have missed out on.

Anathemize

On September 15, 2012 at 1:13 pm

Most consoles when they are released are sold at a small loss. The reason they do this is to get more people to buy it so they can sell their dev tools for more. Also their exclusive games that they make will sell more copies as well. Now eventually they will start making money when the hardware becomes cheaper over time.

My guess the reason they have shorter supply than demand is to reduce the amount of money they lose in the first week. One of the biggest reasons PS3 took the option to install a new OS off the system was people were buying mass amounts of PS3′s for their computing power. They would install linux and raid them together.

They did this because it was cheapest way to get the computing power…cheaper than buying the parts.

bob

On September 15, 2012 at 3:22 pm

over priced you guys are wankers

demize

On September 15, 2012 at 7:20 pm

Most people are comfortable at this launch price. I like some of the new gameplay ideas the controller brings to the table. Still the launch titles do nothing for me. I’ll have to wait for that must have game for me to buy this thing.