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Nintendo on supply issues: ‘Sometimes we get it wrong’

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Photo by James Bareham / The Verge

Last night Nintendo made a surprise announcement: a brand-new piece of hardware is launching this summer in the form of the New Nintendo 2DS XL. That will mark the third major hardware release for the company in the span of nine months: the now-discontinued NES Classic Edition released in November, followed by the Nintendo Switch in March. The one common theme between these devices — and even the older Nintendo 3DS — is that they’ve been incredibly supply constrained of late, making it difficult for consumers to actually purchase them.

I had the chance to ask Reggie Fils-Aimé, president of Nintendo of America, about what exactly goes into the process of determining how many units to make of a particular product. “We create a plan, we build our programs against that plan,” he explains. “But based on what we see in the marketplace we make adjustments, and we go from there.”

Take the Switch as an example. Nintendo originally planned to produce enough of the tablet / console hybrid to sell 2 million of them in the first month. But that number grew significantly — yesterday the company revealed that the system moved 2.76 million units in March. “As we began the ramp up with our communication activity, starting with the video we released in October, then the hands-on events that we did in January, clearly we began to see a consumer response that was very positive, and there was a lot of excitement,” Fils-Aimé explains. “So at that point we began to improve on our production capability.”

New Nintendo 2DS XL
New Nintendo 2DS XL.

One thing that doesn’t necessarily influence supply is the introduction of new platforms. A new 2DS likely won’t have a dramatic impact on Switch production, just as Switch didn’t greatly impact the NES Classic. “It’s not a direct, one-for-one effect,” says Fils-Aimé. “Certainly there are some components that are common within a particular platform; so with 3DS for example, there are some common components. A great example: the AC adaptor is the same whether you’re talking about a 2DS or a 3DS XL. It’s the same adaptor. And there are some things that are shared between a 3DS platform and a Nintendo Switch. But what we try and do, is manage the overall business to deliver as much financial results as we can, and also as much consumer satisfaction as we can.” (Of course, that doesn't necessarily preclude the idea that Nintendo is intentionally limiting stock to increase demand, as many have speculated.)

Successfully meeting day one demand is a problem for most hardware companies — just ask Google. That said, Nintendo says it’s confident that the supply issues that have plagued recent launches won’t also hinder the release of the New Nintendo 2DS XL on July 28th. “We make estimates on what consumer demand is, and if the demand dramatically exceeds what we plan, it creates some tightness in the marketplace,” says Fils-Aimé. “We think we’ve estimated for New Nintendo 2DS XL pretty well, and we’re confident that the consumer who wants to buy it on July 28th is going to be able to do that.

“We get it right more times than we get it wrong. But sometimes we get it wrong.”