Move Over Sony, Microsoft and Nintendo: There’s A New Gamer In Town
by Tony D’Altorio, Investment U Research
October 20, 2009
Let the gaming war begin…
Sony (NYSE: SNE), Microsoft (Nasdaq: MSFT) and Nintendo (OTC: NTDOY) have selected their big guns in the latest fight for domination of the lucrative video game consoles world.
This one involves development of the best motion controller.
- Nintendo: The firm currently has the lead, with an accelerometer built into its handheld device, although that could change in 2010 when the other two debut their own versions. And it’s also alluded to an improved Wii by 2011.
- Sony: The firm’s new model uses a camera to track a device in the player’s hand.
- Microsoft: Mr. Softie’s already highly acclaimed “Natal” features an infrared camera, which measures a gamer’s motion in three dimensions.
If you invest in the technology sector, you may already know about the battle going on between these three opponents.
But what you might not know, though, is that there’s a simultaneous rivalry happening in the handheld games consoles arena – a competition that could lead to bonus points and a boost to your portfolio.
Imitation Is The Sincerest Form Of Flattery… Or Just A Sure Sign Of Desperation
Make room for the new gamer in town.
Apple (Nasdaq: AAPL) poses a very real threat to this ultra-already competitive sector.
Game console makers face increasing pressure from the rise of mobile phones that have processors and graphics to rival any PlayStation Portable (PSP). Add “app stores” of downloadable games for every major mobile operating system to the table, and consumers have even more reason to scroll over to the Apple way of doing things.
In fact, Nintendo warned in July that it faced its first profit decline in four years, due in part to competition from Apple’s handheld gadgets.
And since Apple has taken Sony off guard before in the market for e-book readers, the Japanese firm recognizes the threat, too – and isn’t taking this latest encroachment lightly.
The company recently launched a new version of its PSP – the PSPgo – which looks eerily similar to the iPhone or iPod Touch. The big difference is that it features a slide-out controller, rather than a touch screen.
Coincidence? We think not. Especially considering how it stores games on 16 gigabytes worth of internal memory, rather than on disks like in the old days… just like one of Apple’s portable devices. And it weighs 43% lighter than the existing PSP.
And just like Apple’s App Store, Sony plans to feature a “Minis” section in its online PlayStation Store, where consumers can purchase and download games.
The only problem? It costs $250, compared to $199 for Apple’s 8-gigabyte iPod Touch.
Apple Takes a Bite of the Handheld Games Marketplace
In a September 2009 presentation of new iPods, Apple bragged about how its App Store contained 21,000 games, compared to the Nintendo DS’s 3,700 and 600 for Sony’s PSP. And that range makes it very appealing for mobile game publishers.
According to Edward Woo, a video game analyst with Wedbush Morgan Securities, “The iPhone is where all the growth is.”
That mentality explains why Apple has sold over 50 million iPhones and iPod Touches… dangerously close to Sony’s 56 million PSPs, although still a far cry from Nintendo DS’s 108 million.
And keep in mind that the PSP launched almost five years ago, whereas the iPhone debuted in 2007.
Kaz Hirai, head of Sony Computer Entertainment tried to hold his own by pointing out that consumers prefer “games where intricate motion controls are required… [with] physical buttons.”
Maybe. But Apple still has the edge with games that cost less than $10 each, as opposed to $25 and even $40 from its competitors.
And since that kind of price difference makes a very big difference, Apple holds the advantage for the time being.
Good investing,
Tony D’Altorio
Any investment contains risk. Please see our disclaimer.
4 Responses to “Move Over Sony, Microsoft and Nintendo: There’s A New Gamer In Town”
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Selling more units and which platform is better for playing games on is completely different, just look at the Wii.
Nobody buys the i-phone for the games, they buy it for the apps, and its user friendly internet. This author is getting across the image that the reason why Apples products have fast caught up with the PSP and maybe later the DS is because of the games, sadly that is not true.
This article makes it seem like that the 50 million audience for Apples devices is a 50 million stolen from Nintendo or Sony. The vast majority of these users want the i-phone for what it was made for, surfing the internet, apps and a mobile phone.
Something that the DS and PSP dont realy care about.
i-phone games are short and quite frankly cheap games (looking at MGS on the i-phone) The i-phone dosent get A** titles such as New Super Mario bros, Advanced Wars,Star War Battlefront Renegade Squadren, Metroid Prime Hunters, Mario Kart, Untold Legends, scriblenaughts and Monster Hunter.
They get games made in half the development time of games on the DS and PSP which is one of the reasons why they cost less.
Apple people talk about the specs being equal or greater than the PSP, the PSP was released three years before.
I just cannot take the i-phone as a serious gaming product, especially with its current crop of games and it will never get THAT pokemon esc game that actualy makes handhelds worth playing.
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Here are some of the recent “A**” titles that have already been or will soon be released for the iPhone:
Madden NFL Football, FIFA Soccer, Command and Conquer Red Alert, Assassin’s Creed 2, Need for Speed: Shift, Grand Theft Auto Chinatown Wars, Plants vs. Zombies, Ace Combat, Civilization Revolution, etc. etc.
You’re in deep denial if you don’t think that the iPhone is a formidable competitor to the Nintendo DS and PSP. Some of these franchise games are not available on the PSP or DS, and the graphics are better than the DS, while matching or nearly matching the PSP. And Besides, most of the best games are original iPhone games. Some of the original iPhone titles such as Hero of Sparta and Fieldrunners are not coming over to the PSP and getting rave reviews.
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Freddie,
Apple is bringing in a vast audience of people into gaming through their products, who aren’t “gamers.” They’re growing the market, but at the same time taking away those people permanently from Sony, Microsoft and Nintendo. These companies may be left with only the true “gamers” – a niche market.
Thank you for your comment,
Investment U
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I honestly cannot take the iPod Touch/iPhone as a serious gaming competitor, well I can but cant. The iPod Touch has games, but it would mostly be used for music, internet and apps along with email. That is all. PSP and DS have better games. Though if their gaming quality gets better than I will consider it.
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