IGN recently did an interview with Iwata. But I want to stick to one quote (which I saw through this, and the article doesn't elaborate; though I'll put the full paragraph for conext)

Evolution is certainly something that already defines Wii U, and it has since day one. Just prior to launch, Nintendo confirmed that much of its new system’s functionality would not be present until an Internet-based update was downloaded. This is something that Iwata notes is a fairly familiar process in today’s industry, but regrets the fact that Nintendo’s brand-new console needs this for some fairly basic applications. "Personally I think that users should be able to use all the functions of a console video game machine as soon as they open the box," Iwata told us. "So I feel very sorry for the fact that purchasers of Wii U have to experience a network update which takes such a long time, and that there are the services which were not available at the hardware’s launch."

He doesn't sound very sold on the idea of holding launch features between a day one update. I would have thought that he would have championed holding the console back over doing this since many onwers of the Wii probably didn't even connect it to the internet (while I don't know the full statistics; the fact that they seem to think putting out a new Wii Model without internet connectivity kind of says that it is likely a sizable group of people).

Who do you think convinced him to go with it anyway? Do you think it was purely a money/timing thing; and he was told that, for instance, the console may not be out by the end of the year if they didn't do it (although going by Iwata in interviews, he seems like the kind of person who would have stopped the Wii Mini first anf focused solely on the WiiU launch if people were strongly arguing that to him)?

It isn't a huge deal and I likely will never know (although, it probably came down to time constraints in the end); I did find it interesting how he replied to simply and matter-of-factly about it in an interview.

--Edit-- I'm so forgetful, saw after posting that I hadn't linked the article. Good thing links are bright and yellow or I probably wouldn't have noticed.

Since Nintendo has been loosing money for the last couple quarters for the first time since they started making video games it is probably a money thing. They needed to be out by American Thanksgiving or run the risk of having another bad quarter.

It is far from ideal but once you set a date and ramp up promotion you are going to get slaughtered for putting it back until the new year and missing the holidays. Compare this to a slight regret over missing features, I think this was the only realistic option.

@alternate said:

It is far from ideal but once you set a date and ramp up promotion you are going to get slaughtered for putting it back until the new year and missing the holidays. Compare this to a slight regret over missing features, I think this was the only realistic option.

Yeah I see that. I just can also see how this could turn into a serious public backlash when some people start crying out about how they can't use their machine properly on Christmas day (although at least all they need to do is connect to any internet and download one update - not keep it there indefinitely - so theoretically they could bring it to someone elses house or something and go from there (although I wonder if Nintendo will be forced to let people post it to them and them to download and set it up for them and set it back - like how some people are sending WiiUs to them to change the Network ID onto a different console ect...).

I don't pretend to know how businesses work, but, even being the head of the company, I doubt he is involved in every single decision. This seems more like a situation where the reality of manufacturing and deadlines was more the cause. I very much doubt that someone came to him a year ago and said, "Let's hold major features back for a day one firmware update". I can't imagine Nintendo would have gone this route if they had other options.