Nintendo's in Trouble if Abysmal Wii U Sales Estimate is on Target

Despite having a head start over the competition, Nintendo may have lost the next-generation console war before it's fully begun. Nintendo's going to battle with the Wii U, an IBM PowerPC-powered console that launched in the U.S. on November 18, 2012, and several other territories shortly after, but sales haven't been through the roof. How low have they been?

Wedbush analyst Michael Pacter put the tally at just 80,000 Wii U units in February, a number that jibes with NPD Group's data, and that's troubling for a number of reasons. First, it's not outselling the original Wii, a much older console. Even more troubling is that Nintendo's Wii U sales in February were less than half of the 165,000 PlayStation 3 units Sony moved, and nowhere near the 225,000 Xbox 360 consoles Microsoft sold.

White Wii U

"The Wii sold nearly double our estimate as the Wii U vastly underperformed our expectations, likely due to a relatively thin release slate and an unusual number of returns," Pachter wrote in a note to investors. "It is difficult to envision a turnaround in Wii U hardware sales without a price cut or until more compelling software becomes available, but we think that weekly sales of 20,000 units is likely. We think that the long-term appeal of the console will be severely limited by the perception that the next consoles from Microsoft and Sony will be much more powerful with greater online integration and multimedia functionality."

There's the rub. Sony has already announced its PlayStation 4, which will go on sale during the holiday season, and Microsoft is close to revealing its Xbox 720 (Durango), and it too is expected to be available by the end of the year. The Wii U will be technically inferior to both when they debut. On the bright side, Nintendo probably has some wiggle room with the price -- it's estimated the Wii U's Bill of Materials (BOM) is $180, and that may have come down since last year. The Wii U current starts at $300 MSRP.