It wasn't supposed to be that low volume in planning stage. They projected 5 milions for first two quarters and then probably 10+ milions for next year.
Specifically:
Nintendo initially projected 5.5 million shipments from launch until March 31st.
THEN, in January, seeing as they only managed 3.06 million shipments from November-December, Nintendo revised their Wii U projections downward from 5.5 million to 4 million total from launch until March 31st.
THEN, in April, Nintendo missed their 4 million projection with only 3.45 million shipped. To inspire confidence in investors, Iwata then announced that by March 2014, the Wii U would have 12.45 million lifetime shipments.
It's widely expected that tomorrow, Iwata is going to announce another downward revision of Wii U hardware targets.
You're right---Nintendo's internal expectations have always been high-volume.
Therein lies their issue with cost cutting and accessing lower component prices. Most contracts include re-orders priced significantly lower than the initial order essentially to ensure customer loyalty, but for Nintendo I doubt they have even got through the initial supply contracts they signed this time last year. Given their shipment estimates I would make that a highly likely outcome.
Considering their original target was 5.5 million Wii U units shipped, I'm willing to take the bet that the 5.5 million figure was central to initial agreements with key suppliers.
With an estimated 4 million consoles shipped as of June 30th, I'm certain that Nintendo hasn't sufficiently fulfilled initial supply contracts. And given the twice-revised projections, I don't think suppliers are particularly thrilled at rewriting contracts with Nintendo to significantly undercut their current prices.
Like you said, this puts Nintendo into a conundrum. If they would want to lower their prices, they'd have to orient themselves firmly as a loss-leader. Taking that kind of strategy drains their capital and needs to be sufficiently made up with in royalties and software sales...neither of which are particularly strong for the Wii U. And then there's that pesky ¥100 billion operating profit goal that investors are expecting...
that definitely put Nintendo in a corner even more.
People on the internet are overdramatizing about this... just like they did with the PS3 and the 3DS.
Wii U will be fine. It won't make the insane wii numbers, but it will be fine, once the good software gets released.
Based on what metrics, exactly? Because they already have a 2D Mario game out for the system (27.8 million shipped on Wii, 30.38 million shipped on DS) that hasn't significantly pushed consoles at all post-launch.
This sets a trend that traditional Nintendo IPs will not have the same kind of pull when released on the Wii U (cf. GameCube).