A Tale of Two Product Introductions

By Frank Levinson, Guest Author

Both the Nintendo Wii and Apple’s iPhone experienced terrific product acceptance but how the two companies handled that success tells us something about Japanese and American product introductions.

The Wii was introduced in November 2006 and was an instant hit with its more active approach to the traditional video game space. No longer do you sit exclusively on a couch and exercise only your fingers and wrists but with Wii games you stand up, move about, swat video tennis balls including some top spin, you cast for fish in a stream and reel them in to feed yourself in an adventure game.

And you sweat. Cool.

Now the Nintendo Wii was interesting as well because it was the lowest cost of the 3 competing systems – $249 as opposed to $399 for Microsoft’s XboX 360 and $599 for Sony’s Playstation 3. Both the other competitors sport state of the art processors, graphics, large memories, hard disk drives as well as DVD and blue-ray DVD players.

But Wii used pretty standard silicon chips. While the other 2 supposedly lose money on each console (making it up on license fees from game sales), Wii sells for less but with substantial profit in every console and every game.

So?

Well in the ensuing 8 months Wii’s have been in short supply so that you cannot just show up at a Toys-R-Us or Best Buy and get one. There are plenty of XboX 360 and even PS3. But no Wii.

Now let’s compare this to Apple’s iPhone. Again a ground breaking product because of its use of PC standard OS, web browser, normal mail, great iPod, yada, yada. I have one and I really love it. Now I have never owned a blackberry and my guess is those are better for some business people, but my iPhone works stunningly well.

I have used it to watch YouTube and connected with my kids just by understanding why they like it so much. I have been an Apple Macintosh user now (again) for several years so finally I have a phone that perfectly syncs to my contacts, calendar, songs, photos. My life has become really portable.

And while these 2 products, Wii and iPhone, had similar levels of hype, I would guess iPhone had the most. So you would think it would be in short supply. Not so! Readily available. I waited until Saturday morning after the launch on Friday night, walked into an ATT store and bought 2 of them, one for my wife and one for me.

We had existing ATT accounts with some bells and whistles so our activation took a bit longer but I could see ATT representatives getting better over the day or so it took me to get fully on board. My guess is that Apple has sold about as many iPhones as Nintendo has sold Wiis but Apple did it in 2 weeks as opposed to 8 months.

So the question is why?

Well it cannot be because Nintendo cannot make enough Wii parts. High tech is not in an overly hot time, chips and such are readily available, foundries are busy but not oversold, subcontract manufacturers have space for more work in SE Asia. And there is that proof that if you want to get a product built, say a bunch of iPhones, that you can do it!

So what is at the root? Japanese control freaks. They have made the decision that it was better to keep the market waiting and the “buzz” going for as long as possible. To not worry about XboX and P3 taking sales from folks no longer willing to wait for Wii. To believe that they are so important that this is the right approach.

Apple on the other hand, probably already has next generation iPhones already in beta testing for release in the early fall. If iPhones prove to be like iPods, then we will see new models every 4-6 months some will just have feature creep such as new models with 8 and 16 GB of Flash instead of 4/8 GB models they released recently. Other new features will be smaller cheaper models with limited capability or new services that with their partner, ATT, will garner both additional revenue.

In other words, Apple did not try to prolong the buzz. They wanted to saturate the market as rapidly as possible so that the market would be ready to trade up and put the old part in some drawer or hand down to the kids. They want to keep the store shelves full until they are ready to sell you something new.

Even if you argue that Nintendo did not know Wii would be so successful, they did by Christmas time and for the level of technology inside the box, they could have amped up their manufacturing easily in 2-3 months so the fact that shortages persist, really means that this is so because it is planned.

Interesting … no?