Nintendo reacts to DS demand; orders, share price on the rise

Nintendo has the kind of headache most companies dream about. On one hand, Nintendo is confronting greater-than-expected consumer demand for its upcoming DS handheld. On the other hand--and here comes the headache--if Nintendo can't meet increased demand, Japanese consumers who can't locate a DS to purchase when it goes on sale December 2 might decide to spend their handheld budget on a Sony PSP instead. Sony's new handheld comes to market in Japan just 10 days after the DS, on December 12.

For now, the market is aggressively seeking out the DS. According to yesterday's Nikkei Journal, Nintendo has revealed that preorders for the Nintendo DS have reached 2 million units, double the company's initial expectations.

Nintendo had prepped the DS pipeline to manufacture 1 million units for the launch. With demand now twice that, the company has responded by bringing a third factory on board to produce the handheld. The DS is being manufactured in China.

Nintendo has already closed down most Internet shopping sites selling the DS--those closures came after just one day of order taking (which began, and ended, on November 3).

While bringing new production facilities on line now won't increase Nintendo's shipment numbers significantly during December, the company expects to meet long-term demand by having 2 million units in the retail channel shortly after the new year begins.

Nintendo is now raising its sales forecasts for the DS to 4 million, up from 3.5 million, in its current fiscal year (which ends March 31, 2005).

"Preorders are going smoothly with stores filling up on their online orders," Nintendo president Satoru Iwata remarked to the Nikkei Journal.

Major retailers in Japan are still taking reservations for the DS, although consumers need to go directly to the stores to reserve.

Nintendo shares closed today at 12,550 yen ($118.33), a jump of 460 yen (3.8 percent) from the day before.