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Nintendo's New Look
Forbes has an article talking with Nintendo of America's VP of Marketing Perrin Kaplan. She talks a little bit about Nintendo's upcoming plans, and the concept of the Blue Ocean. From the article: "For us, it's all about the experience, not if the technology allows you to play your game on the high-definition formats, which are now in such a small percentage of homes. Many independent sources tell us that experiencing current high-def games on a regular TV makes it near impossible to see everything clearly. That means the majority of homes are experiencing something lesser than what they bargained for. "
An amazing hardware and software platform get you nothing if you don't have the software to back it up. I've played most of the Xbox 360 titles that have been released so far, and nothing has really made me want to drop the $400 on the console. Honestly, the multimedia features are the biggest draw, but that's not saying much for a game console.
The PSP vs the DS is another excellent comparison. There is no question that the PSP is the superior piece of hardware. What does it have to offer? PS2 ports and clones, games that really aren't made to be portable. The offerings on the DS are MUCH more suited to the system and it's intended use. Hence, it is quite successful.
They're like a car company saying to their customers, "You don't want a big SUV - you want our compact car with good fuel economy".
Your analogy to the car market is a bit funny because it is right on and yet contradicts your point. I will admit that the SUV is a big market. Yet, not everybody wants a big SUV. A lot of people actually do want an economy car. Other people want sports cars. Other people want motorcycles. Have you been reading any news on General Motors? They posted record losses last year in the billion dollar range. Sales of SUVs were dismal in the second half of 2005. During the same time period, companies like Toyota and Nissan reported record sales of their mid-size cars. The demand in the market is changing.
In the same way, Nintendo is trying to target a totally different market and I think if this new controller works and they can produce fun games, they will see great success. Also, I would point out that unlike some companies, Nintendo has proven they actually can make a profit in the video game industry.