09 May 2010 ~ 0 Comments

The Apple Threat: Should Nintendo Make Its Own Phone?

Apple has entered the gaming business with a bang. Who would have thought that we’d be talking about Apple as a video game juggernaut even two years ago? Yet the reality is that the iPhone and iPad’s multitouch interfaces and endless stream of affordable apps have begun to eat into the sales of traditional game and console makers.

Nintendo’s not taking the Apple threat lying down, though. According to The Times, the gaming giant is focusing all of its resources on an all-out assault against Apple, the company that Nintendo sees as the “enemy of the future.”

This brings up one important question: how should Nintendo fight back? One of the iPhone’s greatest advantages as a gaming device is that gaming is just one of its functions. Its dual functionality as a phone is what really makes it sell; gaming has just been a beneficiary.

In order to truly be competitive with Apple, does Nintendo have to build its own phone? Would it be a savvy choice or an epic disaster? Let’s answer that question now.

A Device Only for Games Just Doesn’t Cut It

The iPhone is taking big bites out of the software revenue of both the Nintendo DS and the PlayStation Portable (PSP). It’s simple, really: people don’t want to buy or carry around two devices, and especially when it comes to the casual gaming crowd, they need a phone a lot more than they need a portable gaming device. The iPhone fits the bill, the DS does not.

The new reality is that, in the post-iPhone world, portable devices dedicated to gaming just don’t cut it. Hell, even consoles are diversifying: the Xbox 360, PS3, and Wii all stream Netflix and the Xbox 360 and PS3 have very strong multimedia and online components.

In the portable market, Nintendo is peddling the old model of delivering games: via cartridges purchased at a store. Apple pioneered new model: via downloads from easy-to-use app stores. Oh, and as we’ve reported before, iPhone games are far cheaper than their Nintendo or Sony counterparts.

This perfect storm means one thing: Nintendo can’t rely on portable devices that only have gaming functions. Eventually, more consumers will demand the functionality that they receive from the iPhones.

Nintendo Should Learn from the N-Gage

In 2003, Nokia actually tried to build a hybrid phone and gaming device. It was called the N-Gage, and it quickly became one of the biggest punch lines in the gaming universe. The “taco phone” never gained traction because of its odd shape, poorly-designed controls, and its unappealing aesthetics. There wasn’t a demand for the hybrid phone.

I’m sure that Nintendo’s discussed building its own phone, but I’m also sure that the N-Gage’s dramatic failure came up in the very next sentence. You simply can’t add phone functionality to a gaming device; people won’t put just anything up to their ears.

The smartphone market is a very rough market to play in right now. The iPhone and Android are on a collision course, with players such as the BlackBerry taking up the other key segments of the market. Even Palm, with its patents and impressive WebOS couldn’t break into the market. Why would a Nintendo phone do any better?

Building a phone isn’t easy or cheap. Even if Nintendo thought it needed a phone to compete with Apple, it’svery doubtful that it could out-engineer the very talented teams behind the iPhone and the iPad.

Nintendo, Do Something. Just Not a Phone.

Nintendo is smart to identify Apple as the enemy of the future. However, if the company has any common sense, it won’t try to compete directly with the iPhone — it doesn’t have the expertise to build something with the same form factor and functionality as the iPhone, and it doesn’t have the app store to match.

Nintendo’s current strategy is a start, although it isn’t enough. Sometime later this year, Nintendo will launch the Nintendo 3DS, a portable gaming device that will provide 3D effects and motion-sensing technology, all without the dorky glasses. This provides it with a major differentiating factor from the iPhone, but is it really enough to make consumers buy both an iPhone and the 3DS?

The 3DS may very well become a market success, but eventually the iPhone’s gaming catalog will simply dwarf the Nintendo library in terms of size and quality. Apple’s also serious about taking on the gaming powerhouses: the Apple Game Center, which will be released with iPhone OS 4.0 this summer, is a major addition to Apple’s gaming arsenal.

So what should Nintendo do? While I don’t know the answer to that question, I do know one thing: building its own phone would be a costly mistake for the company that was built on the backs of Mario, Link, Samus, and Pikachu.

via The Apple Threat: Should Nintendo Make Its Own Phone?.