A new report from the Wall Street Journal says that supply woes for Nintendo Switch could actually be Apple’s fault. Not that the two lines of products – Nintendo Switch and iPhone – are in direct competition with each other. Well, actually, they are, but not for customers – for internal components like LCD screens, which both currently use.
But that’s not the only competitor. The other is an unlikely foe – datacenters. These server warehouses require NAND flash storage, just like the Nintendo Switch does.
The real problem is that Nintendo cannot afford to outbid either Apple or datacenters. In Apple’s case, it might not even be a question of outbidding them. The iPhone maker simply has too much clout for a supplier to ignore. No component maker is going to want to rub Apple the wrong way just to satisfy a Japanese gaming company, and that’s the truth of the matter.
Even if Nintendo were able to outbid other buyers, they’d be cutting their margins really thin on the Nintendo Switch, which they can ill afford to do. Their financial projections during the last earnings call showed that net incomes were going to take a hit because Nintendo had big plans to market the Switch. Any change in component acquisition costs could seriously impact those plans.
And what’s making matters even worse is that the demand for Nintendo Switch doesn’t seem to be letting up. After initially doubling their production estimates to 16 million units from the earlier 8 million estimate, they’ve pushed that up even further, and it now stands at about 20 million units by the end of March 2018. That’s twice the initial forecast of 10 million units sold by then.
Nintendo has yet to confirm that number, but there’s no question that demand is far outstripping supply, as we’ve seen since the launch. The biggest fear that we had – and, now, Nintendo apparently has – is a shortage during the high-demand holiday season 2017. The WSJ report notes that Nintendo may even go so far as to send the Switch to the U.S. via air cargo during the holiday season, a repeat of what they did shortly after the launch on March 3, 2017.
That’s going to be an expensive proposition, but probably not as expensive as trying to outbid Apple and a bunch of other tech giants for components for Nintendo Switch.