Nintendo on Thursday scaled back its estimate for Wii sales by 23% to 20 million units. That means a loss of 5.96 million units.
A few months back, when Nintendo decided to cut the price of its Wii unit by $50, to match Sony and Microsoft, I wrote
Sony’s decision to cut prices by $100 means it needs to generate 23% incremental sales, above and beyond what it would it have achieved without the price cut. The 23% number was based on gross margin and customer margin assumptions I made. Now the third game console maker and the market leader in the next generation game consoles, Nintendo announced a $50 price cut on its Wii.
Let us assume Nintendo’s models show Sony selling 23% more units than they would have normally sold due to $100 price cut. Let us also assume Microsoft gains the same – both PS3 and XBox gaining at the expense of Wii. This means Wii stands to lose 5.86 million units sales (email me for numbers).
Coincidence? Or good data modeling?