Verizon iPhone: A Serious Threat to Sony, Nintendo
Verizon (VZ) announced today that the Apple (APPL) iPhone will be available for its carrier, and while all eyes are on AT&T (ATT) and the other carriers, there should be some concern coming from Nintendo (NTYDO) and Sony (SNE), too. The two mobile console competitors will have a difficult time gaining ground against the already strong Apple iOS this year.
It's not numbers, but access
Apple's biggest advantage of having the Verizon iPhone will be increasing the sheer number of customers who can get Apple apps. Apple has sold 70 million AT&T iPhones, including 14.1 million in its fourth quarter alone. According to Fortune, analysts expect Apple to sell 9 million Verizon iPhones and 11 million AT&T iPhones in 2011. The estimated 20 million don't even include the millions of iPod Touches expected to move this year.
To put these numbers in perspective, Sony has sold 62 million PlayStation Portables, or PSPs, and the Nintendo DS line (the original DS, DSi, and DSi XL) have sold more than 135 million units worldwide (here's Nintendo's Q4 2010 PDF report). Nintendo has sold 47 million of its original DS mobile console alone since 2004, which, it said in a press release last week, "makes Nintendo DS the nation's best-selling video game system of all time." Impressive numbers all around.
One thing Apple's competitors do not have, though, is access to the non-gamer. If people are buying a system from a hardcore gaming company like Sony then they already identify themselves as gamers. On the other hand, Nintendo has claimed that it is getting non-traditional gamers interested in interactive entertainment through the Wii and the DS line, but these non-traditional gamers still must purchase the game system in the first place.
The biggest strength of the iPhone is that people believe they are purchasing a phone that can do a whole bunch of cool stuff -- not committing a couple hundred dollars to a machine made explicitly for play. According to the CTIA Wireless Association, 91 percent of Americans own cell phones -- and the Electronic Software Association says 42 percent of American heads of households play games on their cell phone. Calling the iPhone only a cell phone is like calling the iPod Touch only a music device -- but it gives non-gamers a gateway into the Apple gaming universe, and Nintendo's products will always be known as game machines for gamers. There is nothing Nintendo can do about that, at least in 2011.
New Nintendo handheld off to a rocky start
Nintendo is super optimistic for sales of its upcoming 3D-enabled 3DS handheld, expecting to sell 4 million units and 15 million games in March, its first month out. Nintendo has a rabid fanbase and, after having some hands-on time at last year's Electronic Entertainment Expo, I believe it will be a successful, if not great console. The real question, however, is if Nintendo can win in 2011 when it, despite its userbase, is the underdog. Consider the facts:
- Originally planned for Fall 2010, the Nintendo 3DS was delayed and Nintendo missed the crucial holiday window, losing a serious headstart against Apple and literally millions in potential 3DS sales
- The 3DS now has a health warning that the 3D visuals may damage the eyesight of children under 6 -- a key part of Nintendo's family friendly content
- The sophisticated graphics will likely make the console considerably more expensive than Nintendo's previous portables. The Japanese version has already been priced at about $298, which makes it 50 percent more expensive than an iPod Touch or iPhone
- The 3DS was announced a week before its predecessor, the DSi XL, went on sale. The DSi XL had relatively small sales compared to earlier models, which shows that Nintendo isn't making the best timing decisions right now
- It will be coming out right before the iPad 2, which is expected in April. Most iPhone games can be played on the iPod Touch and iPad, too
Sony's still a strong brand, particularly with the aforementioned hardcore gamers, but the company is having a difficult time in the handheld console market.
- It managed to dilute its audience by releasing too many radically different updates to the PSP
- With the just-confirmed PSPhone, Sony's video game department is getting into the relatively unknown carrier universe now ruled by Apple. (Of course, Sony has a long line of cell phones, but traditionally the company departments work separately, not together.)
- Apple was reportedly mulling over a Sony takeover late last year -- obviously Sony is not in a position of strength
Attracting more developers
The biggest blow the Verizon iPhone will land will be speeding up the Apple iOS gaming gold rush. Supportive of indie games, the iPhone as well as the iPod and iPad have created their share of millionaires, but Apple has gotten serious about attracting major console talent, too. Electronic Arts (ERTS), Konami, and other Apple developers have been with Nintendo since the very first Nintendo Entertainment System in 1987 and Sony since the original PlayStation in 1994.
Perhaps because the DS line, until recently, is traditionally underpowered and the PSP line has been scattered, these major developers are working with Apple, too:
- The first portable version of the powerful Unreal Engine is now on the iPhone -- even though it originated on the PlayStation systems
- Legendary game designer John Carmack launches his long-awaited game Rage on the iPhone before the home consoles
Photo courtesy of Yeray Hernandez // CC 2.0
Related: