For August, we expect a month-over-month decline in hardware units across all platforms. We don’t consider this significant as hardware sales tend to slow down in the summer months, especially with no “real” reductions in hardware prices. Again, the Nintendo Wii’s shortfall this month can be attributed to the lack of supply in the retail channel. September should see a significant amount more of Wii’s shipped into the retail channel to ease demand and fend off any possible threat and an Xbox 360 price cut may have. While it has been discussed numerous times that the Xbox 360 and the Wii are not in direct competition with each other, it is too hard to ignore the influence—even if it is minor—a sub $200 Xbox 360 SKU could have against Wii sales.
We should point out that we would not be surprised if the Wii hardware sold well under 500,000 units in August. Retail channel checks indicated that there was a significant decrease in hardware shipped into the retail channel early in the month. Later in the month, however, we witnessed a significantly large shipment shipped into the North American market. The Wii’s results for August will depend largely on how many units were sold during the last week of the retail motnh (August 30th). Further backing up our theory is data from the gray market (reseller sites like Ebay.com). Gray market prices increased almost 5% during August, which is a good indication that either demand increased and/or supply decreased during the month. We suspect that a decrease in supply was the cause as there were no significant Wii releases during the month or any other factor that would indicate that demand increased over July.