Nintendo Wii Becomes a Console of the Past
Phillip is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As the tech giants gathered for the E3 conference on June 10, Nintendo (NASDAQOTH: NTDOY.PK), a company that has been relatively silent of late, spent a few minutes discussing a new release of the videogame "Bayonetta."
What this focus means
This focus on a single videogame doesn't bode well for those holding stock in Nintendo. After all, the company's flagship Wii is now nearly seven years old. The newest version of that device, the Wii U, released late last year, only featured 29 video games at the time of the release, and it isn't significantly different from the original device.
The Wii was groundbreaking in its time, but Nintendo will have to get to work on a new console if it is going to compete with the upcoming releases of Microsoft's (NASDAQ: MSFT) Xbox One and Sony's (NYSE: SNE) PlayStation 4. The new Xbox is slated to be released in November, and the PlayStation is set for release around the "holidays," according to Sony.
Focus on a single, distant game
Nintendo's focus on a single game that isn't even due for release until next year should concern investors. The company might be in a position where it is becoming as irrelevant as BlackBerry has in the smartphone market. Nintendo's share price has essentially fallen after a two-year spike following the release of the original Wii. In fact, at around $12.50, the share price is roughly half of what it was during the recession.
What the other guys are doing
As Nintendo gains little attention about the release of a videogame, Sony and Microsoft have made headlines over the release of their respective gaming systems. By the end of the year, gaming customers will be able to buy the new consoles, which will be wrapped and placed under many Christmas trees, while the Wii accumulates dust in a over-packed closet next to a Sega Genesis, a Game Boy, a couple Slinkies, several yo-yos, and other abandoned toys.
Fight for the top spot
In the battle for console supremacy, Sony officials said on June 10 the PlayStation 4 will cost $399, which is $100 cheaper than the Xbox One. Furthermore, Microsoft indicated its device will have restrictions on users. For example, they can only trade in games at authorized retailers, they can only pass a game on to a friend once, and they have to be friends for at least 30 days. Those restrictions, coupled with the higher price tag, will likely result in fewer sales for Microsoft. However, the company can be sure it will at least be the second most-chosen device, since Nintendo hasn't made a major breakthrough since the original release of the Wii in 2006.
Units by sales
VGChartz, in its most recent sales report, showed that the PlayStation 3 sold 127,649 units in the first week of May, compared to 92,388 units of the Xbox 360, and 26,864 units of the Wii U. The same company reported that PlayStation 3 sales have passed the Xbox 360 sales. PlayStation 3 consoles have been sold by Sony 77,313,472 times compared to 77,311,669 Xbox 360 sales, according to the May 28 story. The Wii U sales weren't included in the research because that device is relatively new.
Importance of upcoming console releases
The upcoming release of the PlayStation 4 and Xbox One is important for Microsoft because the company seems to be losing out in every other sector of which it is a part. Bloomberg reported on March 14 that 1.5 million Microsoft Surface devices have been sold, compared to nearly 23 million iPads sold in last year's final quarter alone. Microsoft needs to find a way to come out with its own hardware, rather than try to copy the inventions of others. However, Microsoft will likely continue to dominate the computer software sector in the years ahead, as there are few company's looking like they are challenging Microsoft Office. If Sony dominates in the sales of the PlayStation 4, Microsoft will have to sustain another blow to a market segment.
In an industry where being current will drive profits, Nintendo is lagging behind. Sony has consistently been ahead of the pack in the release of its gaming systems, and it looks to have console releases down to an art. Microsoft still has time to change many of the restrictions on the Xbox One, but if sales of both consoles were to begin today, Sony would be far ahead of the pack. Nintendo, well that company will have increase research and development activity to really get back in the action.
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Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Nintendo. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!