Charts before tracking NX

[Yui Nausicaaさん]

Just few weeks away from the launch on 3 March. The unit shipment of NX will be closely tracked by the market. This is kind of long term task given the lifespan of this model might last 5-6 years(I/m long on this stock so of course I hope it could last longer lol). 

Projection of sales is not an easy job if possible. There are many projections about how the NX will sell. Currently, the consensus for the first year sales might be around 8m-10m. And there is another projection saying that NX will sell 40m by the end of 2020. 

As a fan of system dynamic and diffusion, I generally discount those projections which do not reveal it's TAM estimate. You can be bullish on this new model and estimate it could sell more 100m in its life cycle. Or you might be bearish on this non clear-cut gaming device so it should only sell 20m in its life cycle(Wii U was around 13m). Actually, both numbers are fine. Then you can start thinking how it might diffuse across the life cycle.    

Hard to imagine? Here we can find a reference model. How about Wii? 

Below is the wii shipment number. What's your thought? (All data are from wiki) 

http://imgur.com/a/TwL8H

Generally, people sayWii sold every well and over 100m units but most of them have no idea how sales numbers look like in it's life cycle.  

As we can see the annotated chart below. 

http://imgur.com/a/asMjh

Observation

1. Not surprisingly, holiday season sold most during a year. 

2. The launch of Wii was during holiday season 

3. It took 3 years for Wii's sales to peak 

Implication

1&2: NX is set to launch during non holiday season. The company's projection of 2m units shipment in calendar year 1Q17 is reasonable but might be conservative if supply is not an issue. If the shipment number turns out to be similar to that of Wii in its first quarter, NX will be very promising.  

3: No matter how well the NX sells, if supply is not an issue, it will not take 3 years for NX to get to unit shipment peak due to information/goods distribution should be better now a days. (and don't forget about the sharing aspect of NX which will create a demand side network effect). We can say the success of Wii is not all of a sudden, it still requires time to diffuse.

Projection:

1. If there's no supply issue, the unit shipment peak should be in the second holiday season in it's life cycle. We will read this number in the end January 2019 depending on the earnings release schedule. 

2. If the "sharing aspect" really works, we should expect the unit shipments in calendar year 2Q17 and 3Q17 to show some momentum. That is to say, 3Q>2Q>1Q assuming 1Q17 is just "reasonably" good rather than "extremely" good. 

Another annotated chart might be interesting as well 

http://imgur.com/a/4aSnr

What's your thought about this? 

1. The installed based still has growth potential, you might want to launch an extension model rather than a brand new hand-held console. Secondly, you might want to distribute more software on this platform by leveraging your ip. And this what Nintendo is trying to do after seeing the strong software sales driven the Pokemon GO. This indicates the company expects NX and 3DS to coexist, at least for a while. Since two hardware features different experience and the company has strong ip, the so called cannibalization should be manageable.  

I write these bs is just to document my thought.