Nintendo's Plan

[Weirdy]

source

 

Sept. 16 (Bloomberg) -- Nintendo Co., which introduced Super Mario and Donkey Kong to the world in 1981, will be relying on the same characters to sell its new game console next year even as Sony Corp. and Microsoft Corp. offer faster machines that provide realistic graphics and broadband Internet connection.

 

As Sony and Microsoft showcase their latest devices at the Tokyo Game Show today, Kyoto-based Nintendo is betting that by keeping the hardware of its new Revolution console simple, it can keep prices low to target children and women.

 

``Nintendo realizes they can't be No. 1 in this industry,'' said Takashi Oka, who has an ``outperform'' rating on Nintendo's stock at UFJ Tsubasa Securities Co. ``Instead of over-investing in hardware to the point that they can't recoup losses, they are looking to churn out steady profit from capturing a niche.''

 

Nintendo, which dominated the game console industry in the 1980s, has seen its market share shrink to about 14 percent for its GameCube machine. Microsoft has spent more than $12 billion on the Xbox since 2000 to give the device Internet connection, hard drives and a DVD player. Sony is developing the Cell chip for its PlayStation 3, which will make it 35 times faster than its older console.

 

What Sony and Microsoft are doing is ``similar to taking a Formula One racing car to go shopping at the neighborhood grocery store,'' Nintendo President Satoru Iwata said in an interview in May. ``Our focus is on strengthening the game, rather than strengthening and adding more horsepower to the processor.''

 

Nintendo's best-selling games are ones with its signature cartoon characters of Super Mario, Donkey Kong and Pokemon, while Sony's top seller is the Grand Tourismo racing car game. Halo, a first-person shooting game, is Microsoft's bestseller.

 

Console Costs

 

Nintendo's strategy has worked so far. The company hasn't posted an annual loss since introducing the original Nintendo Entertainment System in 1985.

 

Sony's games business took a 51.1 billion yen operating yen loss in the first year after the PlayStation 2, because of costs from adding a DVD player to the console. Microsoft, which loses money on sales of the Xbox and makes money on game sales, has lost $2.4 billion in the past two years in its division.

 

``Having the lower-cost product aimed at a younger age-group market might be where the growth is,'' said Stuart Cox, who manages a $95.6 million Japan equities fund at JP Morgan Asset Management in London. ``Nintendo has been very successful in the past and has read its market well.''

 

Microsoft yesterday said it will charge 37,900 yen for its Xbox 360 when it comes out Dec. 10 in Japan. Merrill Lynch & Co. expects the PS3 to be priced at 44,800 yen in Japan and Revolution to cost 19,800 yen, the brokerage's analysts wrote in a July report.

 

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[Ryuken]

damn, i did not know nintendo is that smart,

[Shibathedog]

Nintendo, While i see their points, and they are some valid points....*shakes head*....its just not going to work. Im not giving up in them, they just need to go back to the way they where, and use some smarter tactics than this, Im not going to buy a game just because mario is in it, im going to buy a game because its a good game.

[suvo]

Nintendo makes the best games *sometimes* but if only the nintendo rev is as good as they want it to bet then i sure want one. I just wish it made more mature games but i still dont mind mario

[Lucandrake]

Hey if nintendo gets kids into video games, does that mean that games will most likely survive longer? Meh, its just me but lately (or it might just be that im getting older) more and more people are considering games a bore :s

[Weirdy]

Hey if nintendo gets kids into video games, does that mean that games will most likely survive longer? Meh, its just me but lately (or it might just be that im getting older) more and more people are considering games a bore :s

<{POST_SNAPBACK}>

well...it's not so much kids if they're just trying to improve the game themselves so that they aren't boring (rather than the hardware)

Edited September 16, 2005 by Weirdy

[ken_cinder]

So if the Revolution is going to launch for 19,800 Yen, that would mean it would be somewhere in the $179-$199 range in the US.

[Lucandrake]

Kick ass price for a next generation console

[Weirdy]

it's cheaper than a ps2 no?

[Agozer]

it's cheaper than a ps2 no?

Eh, the PS2 cost about the same when it was launched here.

[Gryph]

Here's a really excellent and long article on Nintendo's strategy.

http://lostgarden.com/2005/09/nintendos-ge...n-strategy.html