The Nintendo Wii U will be in short supply this Christmas, according to Nintendo, owing to strong pre-order sales and limited production.
Speaking to investors, Nintendo president Satoru Iwata explained why his company had recently slashed hardware and profit targets for the year. He revealed that many retailers had sold out of their allotted Wii U pre-order units.
Iwata named US retail giant GameStop as a prime example. Apparently the retailer had run out of pre-order slots, and was now running a waiting list some 250,000 names long.
It looks highly likely that Nintendo will hit its target of 5.5 million Wii U consoles sold from its US launch on November 18, through the European launch on November 30 and the Japanese launch on December 8, and on through to March.
However, it is this success that will go some way to limiting Nintendo's profits. "As production only started this summer, it has now become more likely that it is our production capacity, rather than consumer demand, that will place limits on our Wii U prospects for this calendar year," explained Iwata.
There's another reason for Nintendo's slightly gloomy near-term figures, and it's a rather unusual one for Nintendo. The Wii U will be made at a loss - initially at least.
Nintendo is known for its prudent hardware pricing, typically making a profit on consoles such as the original Wii. This stands in contrast to Microsoft and Sony, whose Xbox 360 and PlayStation 3 consoles were initially sold as loss leaders. Such models rely on strong software sales for profit, so a cheap and powerful console is seen as an advantage.
It seems with the Wii U, Nintendo is finally switching to its rivals' approach.
"The Wii U hardware will have a negative impact on Nintendo's profits early after the launch because rather than determining a price based on its manufacturing cost, we selected one that consumers would consider to be reasonable," Iwata explained.
The reason the Wii U is so costly to make has little to do with its internal components - it's roughly the same power as the seven-year-old Xbox 360 console, after all. Rather, it's down to the Wii U's unique controller, which is effectively a five-inch tablet with physical game controls attached.
This advanced controller will allow gamers to use a second screen for maps and other extra game information. It will also allow you to play your Wii U games on the controller when your TV is in use.