Nintendo is reportedly fighting with Apple over production of its new console, the Nintendo Switch. This information follows reports last week that Nintendo is aiming to increase production of the Switch in time for the holiday shopping season.
Nintendo is apparently butting heads with technology juggernaut Apple over its production line. A new report suggests that because of its desire to increase production of the Nintendo Switch, it is having to compete with companies like Apple (as well as other smartphone makers) for production parts. However, this is a battle that the video game company may not be able to win.
Analysts point out that "rivals for the sought-after parts can often offer better terms than Nintendo." Those who make servers for data-centers "tend to use new and higher-margin components," while smartphone makers issue "larger orders" than Nintendo. Either way, Nintendo comes up against technology rivals that can offer production companies much more money to make their goods than it can pay those same companies to make the Nintendo Switch.
It's unclear how or if Nintendo will still be successful in its efforts to ramp up Switch production as a result of this hurdle. While the company could potentially increase its offer and ask the production company to just make more consoles, therefore giving Nintendo a surplus, that could be risky.
The Wii U missed its sales targets by a wide margin and no doubt has left Nintendo (and game retailers) with a lot of consoles collecting dust on shelves. While the Switch could potentially outsell the Wii U (as well its incredibly popular predecessor the Wii), it's unclear whether the console can keep its momentum into next year and beyond. Creating many more consoles than it needs could be a big gamble right now.
But on the other hand, what will happen if Nintendo doesn't create many more Switch units in time for Christmas? Retailers have already suggested that Nintendo Switch stock shortages will continue all year - and presumably, those estimates have been made after even factoring in a reasonable amount of additional Switch shipments.
On top of this, Nintendo already has a reputation of not being able to keep up with demand, as seen with the NES Classic and how many people were unable to get their hands on one before it was discontinued. Failing to make more Switch consoles would only further tarnish Nintendo's rep, so how the company works to avoid that will be interesting to watch.
The Nintendo Switch is available now.
Source: The Wall Street Journal