Nintendo appears ready to prove that there are second lives for game console companies. The firm claims that first day sales of its new 3DS were the greatest for any handheld device in the company’s history. The portable product is very different from the Nintendo Wii game console which was so wildly successful that it pushed the firm’s sales ahead of Microsoft (NASDAQ: MSFT) and Sony (NYSE: SNE). As Microsoft and Sony added new features and lowered prices of the Xbox 360 and PS3, Nintendo’s success unraveled. It looked like the industry champion’s run was over. The battle among the three is about to move to the portable market where it was five years ago
The 3DS is an example of how Nintendo’s engineering prowess and sense of the market may put it back on top again. The 3DS appears to be a real success despite concerns about its component delays and claims of some doctors that the product could cause spotty vision problems in young children. The 3DS may be so fun to use that the parents of these children will not care about the effects.
As the war among the three large console companies has begun to move from consoles to portable devices, the unit sales of game platforms may rebound. It may be that the natural market for consoles has been saturated now that tens of millions of the products have been sold. In countries like China, knock-offs have crippled sales, so what should be the largest market for the Wii, PS3, and Xbox 360 has been effectively saturated there, too.
Portable game device companies have a critical reason to rush their products to market beyond the competition they have with one another. Smartphones have become attractive gaming devices. Popular games can be downloaded from locations like the Apple (NYSE: AAPL) App Store. There are forecasts that 3D games will be available for devices like the iPhone within a year or two.
So, Nintendo’s 3DS sales are off to a large head start in the race with Microsoft and Sony. It had better hope that head start holds. And, it desperately must hope that it does not have a number of new competitors from the smartphone market. Having two competitors is one thing. The presence of dozens is another matter.
Douglas A. McIntyre