Slashdot Mirror
On Nintendo And Marketing Myopia
Thanks to Nintendojo for their editorial discussing why Nintendo may be heading for a fall by branding itself a 'video game company', as opposed to Sony and Microsoft's wider goals as part of the "entertainment or technology industries". The writer points out: "Theodore Levitt introduced an idea called Marketing Myopia. To summarize the basic idea of his concept: in an industry where future growth seems guaranteed, a leading company will mislabel itself and ultimately lead to its own downfall." Apparently, the best historical example of this is the railroad industry, who "...labeled themselves as being in the railroad business and not the transportation business, limiting themselves and causing their own downfall." The writer concludes: "The industry has changed. Nintendo is no longer the biggest player in a relatively large niche market. They are in last place in a huge segment of the home entertainment sector, and they need to remember this fact, because no one needs another Amtrak."
The main reason Nintendo posted a loss was the massive loss they took due to their overseas holdings since dollar has been loosing ground on the yen.
The dollar has fallen about 7% compaired to the yen over the last 3 months. Now take into account Nintendo's $5 billion US in cash which is held mostly outside Japan and we can see they took up to 7%*$550 billion yen = 38.5 billion yen in losses just from the devaluation of the dollar. (Thats about $350 million US)
Nintendo isn't suddenly floundering on thier games sales. Its just the US recession pulling down the dollar. Once the dollar strengthens they will have record profits.
On a side note even posting MS size losses Nintendo would still have the cash to finance at least another consol generation or two.