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Nintendo reacts to DS demand as orders rise

Company ramps up to increase production as demand for new handheld exceeds expectations.

Nintendo has the kind of headache most companies dream about.

On one hand, the company is confronting greater-than-expected consumer demand for its upcoming DS handheld. On the other (and here comes the headache), if Nintendo can't meet increased demand, Japanese consumers who can't locate a DS when the platforms go on sale Dec. 2 might decide to spend their handheld budget on a Sony PSP instead. Sony's new handheld hits the market in Japan on Dec. 12, just 10 days after the DS.

For now, the market is aggressively seeking out the DS. According to Sunday's Nikkei Journal, Nintendo said preorders for the Nintendo DS have reached 2 million units, double the company's initial expectations.

Nintendo had prepped the DS pipeline to manufacture 1 million units for the launch. With demand now twice that, the company has responded by bringing a third factory on board to produce the handheld, which is being manufactured in China.

Nintendo has already closed down most Internet shopping sites selling the DS. Those closures came after just one day of order taking, which began and ended on Nov. 3.

While bringing new production facilities onboard now won't increase Nintendo's shipment numbers significantly during December, the company expects to meet long-term demand by having 2 million units in the retail channel shortly after the new year.

Nintendo is now raising its sales forecasts for the DS from 3.5 million to 4 million in its current fiscal year, which ends March 31, 2005.

"Preorders are going smoothly with stores filling up on their online orders," Nintendo President Satoru Iwata told the Nikkei Journal.

Major retailers in Japan are still taking reservations for the DS, although consumers need to go directly to stores to reserve a handheld.

Nintendo shares closed today at 12,550 yen ($118.33), a jump of 460 yen (3.8 percent) from the day before.

Hirohiko Niizumi and Curt Feldman reported for