Report: Wii production way ahead

UBS analyst Alex Gauna claims that Nintendo's 2006 production goal of 6 million next-gen consoles will be "handily" beaten; 2 million units already reportedly made.


When the Xbox 360 went on sale last November, it was instantly beset with supply problems. Many consumers who preordered the consoles months in advance couldn't obtain a console until the following year. Even then, many early adopters were forced to settle for a hard drive-less "Core" 360 or found their units beset with a higher-than average rate of hardware problems.

The PlayStation 3 looks like it will suffer similar supply issues when it hits US stores next month. After being delayed from its spring debut, the console also saw its initial shipment drastically slashed from 2 million day-one units worldwide to just 500,000--100,000 for Japan's November 11 launch and 400,000 for North America's November 17 launch. Though the PS3 has been delayed in Europe until March 2007, Sony still asserts it will ship 2 to 2.4 million units of the console by 11:59 p.m. on December 31.

By Sony's own account, the primary reason for its PS3 woes is the console's optical disc drive. Sony is experiencing difficulty manufacturing the laser diodes for the drives, which will use Blu-ray Discs. The next-generation video format is squaring off against rival HD-DVD, which is not-so-coincidentally supported by Microsoft.

However, unlike Sony, Microsoft decided not to incorporate a cutting-edge disc format in the Xbox 360, which will get an optional external $199 HD-DVD drive later this year. Nintendo went even one step further. Its Wii console won't even support DVD playback, and its graphical and processing power are roughly only twice that of its current-generation console, the GameCube.

Now, Nintendo's emphasis on simplicity and proven technology is apparently paying off. According to a report from UBS Investment Research, the Kyoto, Japan-based game giant is not only meeting its manufacturing goals, but it is surpassing them.

Citing industry "checks," UBS analysts Alex Gauna and Steven Chin claim that Nintendo already made 2 million Wiis by the end of September. They go on to predict that, "at least 7 million and potentially as high as 9 million more units are in the build plan for Q4 06. This production ramp handily exceeds a publicly announced target for 6 million units to ship by year's end." (Emphasis added.) If 2 million Wiis are already made, that could being the manufacturing total to a whopping 9-11 million units, although they all would not likely ship by year's end. [CORRECTION: GameSpot initially reported overall production of Wiis for 2007 would be 7-9 million. We regret the error.]

Besides being music to Nintendo fans' ears, the report should also hearten shareholders of the Broadcom Corporation, which makes the wireless integrated circuits in the next-gen console. Broadcom supplies "one Wi-Fi and two Bluetooth ICs [Integrated Circuits] into each packaged Wii, with the potential to enjoy additional Bluetooth sales from additional controllers."

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