Mr. Universal's Blog

While Nintendo's latest financial earnings report showing a large drop in quarterly operating profit for the Japanese company (66%), based largely on what they call "a slowing demand for the Wii console and stronger yen", may sound surprising, given a sluggish retail market and lack of compelling software for the platform this should have been expected.

What was surprising, however, was the revelation that Nintendo has finally acknowledged what many industry analysts have been saying for some time: the Apple iPhone platform is here, and it's a major competitor, citing slowed sales for the DS hardware due to ""increased competition in the handheld business from Apple's iPhone."  So what does this mean?

Keep reading for even more revealing truths about the two companies...

Sales for the DS hardware have slowed, and while still impressive must be a cause of concern for the company. The mobile gaming market has long been Nintendo's domain, with the various Gameboy iterations helping serve as major financial anchors for the company as it navigated an ever-changing sea of home console competitors over the years. While some had positioned Sony's PlayStation Portable (PSP) as the likeliest challenge to the company's virtual monopoly in the sector (and with 50 million units sold, this is understandable), Nintendo's dual-screened platform has seen unparalleled success in the market since first launching in 2004, selling over 100 million units and helping launch several best-selling titles, including Mario Kart DS, Brain Age, and the recently released Dragon Quest IX.

The third-generation DS hardware, the camera-equipped DSi, launched with much fanfare in Japan last November and has been viewed by many as a direct reaction to Apple's growing influence in the portable gaming market. Since expanding to other markets in April, the DSi has managed to sell an impressive 6.8 million units worldwide despite its higher price-tag ($169) than its predecessor, the DS Lite ($129).

Apple also launched its third-generation iPhone hardware this year, the 3GS, which featured improved graphical performance and enhanced native features to the platform. Initial sales put the 3GS with a blistering one-million units sold in its first weekend alone, adding to the overall platform's (which includes the original iPhone 3G, iPod Touch) tally of well over 40 million units since first launching in 2007. But apart from impressive hardware tallies, Apple's most significant achievement seems to have been with the introduction of the App Store, a virtual department addition to the ubiquitous iTunes Store that houses thousands of applications and games for the platform. To date, Apple has managed to move over 1.5 billion downloads since the service launched in June 2008, with games being the majority of paid downloads.

While some have dismissed the idea of the iPhone platform as a ‘true competitor' in the realm of handheld games, Nintendo's admission is aligned with the commercial realities of Apple's continued investments into the market. Top publishers such as EA, Capcom, Konami, and others have already demonstrated strong support for the platform, while many independent and smaller developers such as Gameloft, Majesco, and others have made their presence known. Nintendo, on the other hand, has already expanded their DSi platform into the non-gaming environment, with software applications such as the Opera browser and Facebook connectivity offered to expand the user's experience on the platform.

It should be interesting to see how both companies, which many see as joined at the 'creative hip', play their cards in an ever-expanding mobile market.  The upcoming launch of Sony's PSP-Go, a dramatically streamlined (and online-only) iteration of the hardware should inject new interest with that platform, as should a never-ending stream of 'iPhone Killers' and competing mobile operating systems from the likes of Google (Android) and even Microsoft.