The parable of Nintendo

With the launch of the Wii console, Nintendo averted disaster. When the Wii launched in late 2006 Nintendo had been facing the simultaneous attack from the “seventh generation” Xbox 360 which launched a year earlier as well as the PlayStation 3, both of which set as their bases of competition 3D graphics at HD resolutions. Many wrote off the company and called the console market a two horse race.

Then, in what seemed a desperate downward leap, the Wii was launched into a different trajectory. It addressed non-consumers with a new, more intuitive controller and standard resolution rather than competing for hardcore gamers with more power and richer graphics.

Because the Wii was asymmetric and addressed non-consumption rather than trying to be a “better” console in what was becoming a horsepower race, Nintendo expanded the console market. Its innovation was interesting enough that many hard core gamers used the console in addition to a PS3 or Xbox and many non-gamers bought it as their first console.

The result is that 95 million Wii’s have been sold vs. 66 million Xbox 360’s and 62 million PS3’s.

The effect of the Wii introduction on Nintendo’s console unit sales is shown below (pink line).

The graph above shows that the growth from Wii has stopped. In fact, the console has been in decline since early 2009. Fortunately for Nintendo, the company also developed a mobile strategy. Learning from its Game Boy device, its DS series of portable game consoles allowed the company to diversify its portfolio. The graph also shows the total portable units sold in blue.

However, this strategy has not been enough to protect the company from the disruptive effect of mobile computing. As the following chart shows, each new generation of portable from Nintendo has failed to break out of a general pattern of overall decline.


Contrast the DS product patterns with the iPod touch and iPad–multi-purpose products whose game functionality is “good enough” but whose communications and general-purpose app catalogs are re-defining the basis of competition yet again.

Nintendo bet on the 3DS to reboot the franchise. The 3DS product does show the characteristic initial spike in adoption but the level it launched at is far lower  than the level of the iPad. Nintendo has a big hill to climb to even recover the volumes it held in 2009. In contrast, the usurper Apple’s volumes are doubling each year.

When products are compared as “ramps” in terms of growth post-launch the story becomes even clearer.

Although the iPhone and iPod touch ramped in similar ways[1] to the gaming platforms, iPad took an entirely different path. The 3DS benefited temporarily from a price cut but it seems to be returning to a well-worn trajectory.

The data points a bleak picture for Nintendo. The Wii was a success due to its competitiveness vs. non-consumption of gaming. But another low end disruption took hold in 2007. Good enough games on phones and mobile computers are taking consumption away from dedicated consoles, both fixed and mobile.

In addition, the rate at which game experiences are improving on iOS imply that they will overtake the “quality” of consoles in the not too distant future. Differences in distribution models also guarantee lower pricing for software for end users and enabling a far larger catalog of titles.[2]

This may sound like another story of fortune gained and fortune lost. The inevitable “what goes up must come down” aphorism. We become used to this pattern and assume it to be axiomatic. But there are causes for each success and causes for each failure.

The lesson here is that a company that disrupts does not necessarily survive. Long term survival depends on the ability for serial disruption. Serial disruption is an uncomfortable state for an organization to exist in. As the story above shows, disruptions are usually enabled by “desperate” necessity. Desperation is not something management is trained to aspire for.

What management strives for is steady state satisfaction and predictability from intelligent planning.


  1. Though the iPhone ramp matched the consoles, the growth for the iPhone is persisting at 100% y/y five years into the product. This means it is outstripping all console installed bases by at least a factor of 2.
  2. The catalog is not only broad but deep in the sense that there are many new game concepts and experiments being tried. The app store is a vast testbed for game and entertainment ideas.
  • Ted

    Why have you not included AppleTV in your last chart.  It doesn’t play games yet, but it must only be a matter of time, so would be an interesting reference point.

    • qka

      I think you answered your own question – it doesn’t play games.

      I would be interested in seeing how XBox models fared in comparison.

      • jdsweet

        Let me tell you – AppleTV plays games just fine, thank you.  I’ve been playing Real Racing 2 on my new iPad3 in “mirroring” mode outputting to my new 1080p AppleTV, and it’s *awesome*.
        The lag (for an uncompressed 1080p video stream to travel wirelessly from my iPad through my router back to my AppleTV) is unnoticeable – specifically, it allows me to play a game where split-second reaction times are crucial to winning.
        Perhaps the lag time is only unnoticeable for this class of game, and there are others where gaming isn’t anywhere near good enough (e.g. months ago, playing a synthesizer app from my iPad 2 to 720p AppleTV was *not* satisfactory), but the fact there’s at least one (great!) game is evidence that the future is already here.

    • JohnDoey

      Neither AppleTV nor AirPort Extreme will run games. There is absolutely zero reason to do that.

      •  but we are putting in devices that are in different markets than real gaming devices and dont effect them so lets put this in

  • “Good enough” kills “best” with alarming frequency.

    • JohnDoey

      I don’t think it applies here. For most users, iPad is a better gaming machine than any Nintendo product. Period.

      • no it isnt………is that why the 3ds is constantly outselling the ps3 and 360 and everything else?

        The ipad is considered shovelware device by most gamers

  • jdsweet

    Let me tell you – AppleTV plays games just fine, thank you.  I’ve been playing Real Racing 2 on my new iPad3 in “mirroring” mode outputting to my new 1080p AppleTV, and it’s *awesome*.

    The lag (for an uncompressed 1080p video stream to travel wirelessly from my iPad through my router back to my AppleTV) is unnoticeable – specifically, it allows me to play a game where split-second reaction times are crucial to winning.

    Perhaps the lag time is only unnoticeable for this class of game, and there are others where gaming isn’t anywhere near good enough (e.g. months ago, playing a synthesizer app from my iPad 2 to 720p AppleTV was *not* satisfactory), but the fact there’s at least one (great!) game is evidence that the future is already here.

  • Ahartman

    I think we’re all expecting a laying over of all the game console shipment lines in the face of the mobile phones and tablets onslaught. But it is not yet reflected in the numbers.

    • famousringo

      I agree. I’ve been watching game console sales for a while and the mobile axe has yet to fall on the game console.

      It’s worth keeping in mind that game consoles see a natural peak and decline over their 5 year or so lifecycle, as saturation and used device markets take their toll. I’d say that mobile computers are stealing growth (non-consumption) from game consoles, but they’re not yet actually eating into the console market. Just look at the 3DS trend line. It’s described as a failure, but it’s the second-fastest selling game console.

      As for the Wii, its biggest problem hasn’t been mobile computers, its biggest problem is poor third party support. Either publishers weren’t agile enough to adjust to the Wii’s disruption of gaming values, or they adjusted with the intent to kill it. Why would publishers want to kill the Wii? Because its a product of the biggest game publisher in the world, and because it doesn’t align with their vision of making one game and selling it on every platform.

      •  the 3ds actually is the fastest selling console ever worldwide

    • Disruption is not necessarily reflecting in unit volumes, especially in the early phase of the disruption (traditional PC still sell in large quantities and tablets grow strongly). Disruption causes a reallocation of profits to the market entrant(s). Sony and especially Nintendo are suffering from declining profitability.

      •  STOP TALKING AS IF YOU KNOW WHATS GOING ON…………….No game company was more profitable than nintendo last year

        top hardware sales, top software sales.

        This year they are the most profitable again.

        Disruption is nothing more than phantom data………..

        the 3ds is the top selling system in the world. Whats disrupting it>

  • jdsweet

    And while the hardware for this platform is a bit pricier than other BSFR (big-screen family-room) gaming platforms @ $499 + $99 minimum entry cost, the cost of game titles is so tiny compared to those other platforms, that TCO is lower if buying more than a handful of titles.

    • abugida

      And if we pretend games are a commodity.

      • jdsweet

        I agree they are not a commodity to hard-core gamers.  But like the Wii, there are vast new audiences ready to take up gaming – particularly for the portion of the audience that never would have spent money on a platform or games before, but suddenly finds the iPad and AppleTV they already bought are capable of “good enough” gameplay.

  • Should the graph showing product ramps be titled “…for portable devices?” It includes a few non-portable tied-to-a-TV consoles like the PS2, PS3, and Wii.

  • Erick

    I think it would be satisfying to see the Nintendo DSi and DSi XL combined into one curve. They are arguably much more similar to each other than the iPad 1 vs iPad 2 (or the DS and DS “Lite” which appear to already be combined, or all the models of PSP).

    A case could be made for merging other graphs, but I think these are the only two launching close enough together to have any effect on the bottommost graph.

    • BC

      I second the notion. It makes way more sense to combine both iterations of the DSi, and even the DS with the DSi as well. Those products are indicators that Nintendo is emulating Apple’s approach of frequent (almost annual) iterations of improvement on a successful product, rather than sticking with the old “new product every 5 or 6 years” that you see in the traditional console market.

      Insofar as you combine all three iterations of the iPad together, all the DS’s ought to be combined as well. Perhaps it’s better to use a “platform” approach, where you lump products together based on software compatibility. For example, I assume that a game written for the DS also runs on the DSi, so they should be lumped together in the same way that the original iPad is lumped in the the 3rd generation iPad.

      (Somebody correct me if it’s not true that DS games are compatible with the DSi.)

      • Erick

        In terms of software compatibility, the line is a bit blurry, but one can make a case for having exactly three categories: GBA, DS, and 3DS.  Here is the precise compatibility information:

        GBA: Plays GBA cartridges natively and emulates GameBoy Color games.

        DS/DSLite: Plays DS cartridges natively and emulates GBA cartridges (inferior image quality, similar to iPad 2x mode for iPhone apps).

        DSi/DSiXL: Plays DS cartridges and downloadable DSiWare apps natively.

        3DS: Plays 3DS cartridges and downloadable 3DSWare apps natively.  Emulates DS cartridges and most DSiWare apps (a few are unavailable such as Flipnote Studio).

        There is substantial overlap in software between hardware updates, but there are three distinct generations of cartridges and it makes sense to delineate the systems based on which cartridge it is optimized for (my impression is that Nintendo systems are largely hired to play cartridge-based games, not downloads).

        This suggests merging DS, DS Lite, DSi and DSiXL together into one group, so I agree with BC’s suggestion on this basis.

      •  hes already trying to purvey a false point why would he do anything honorable like that?

    • abugida

      I agree. DS/DSLite have the exact same hardware inside. Same for DSi/DSi XL. The difference between the DS line and the DSi line is not bigger than between iPad 1 and iPad 2.

  • Victor

    Hi Horace,
    I would add the online gaming as another disruptive threat to the videogame industry.

    • That is a good point. We have touched a bit on it in the previous “Nintendo post”. It is difficult to get data.

  • synthmeister

     It seems that you’ve only hinted at Nintendo’s (and MS and Sony’s) business model which is the root of their problem–sell hardware for several years at a loss (or barely break even) and then sell the software at ridiculous margins while charging onerous developer fees in a convoluted developer program. A Sony exec famously proclaimed that “of course it was hard to program for the the PS3, otherwise everyone would do it!”

    Apple turned everything upside down starting with annual hardware and OS updates. Think about it: If Apple were still trying to sell the same basic iPad 1 would anyone care? (It might be interesting if you would overlay the dates of iPad/iPhone updates on your chart, Horace.) Yet Sony/Nintendo still think they can sell the same outmoded hardware for 5 – 7 years while they milk the ridiculously priced game sales.

    Then Apple completely democratized the SDK–anyone, anywhere can download it and play with it for free and if you want to try and sell some apps, the entry price is a measly $100 per year. When Nintendo, Sony & MS make their gaming SDKs that easy and cheap, that’s when they might have a ghost of a chance against Apple.

    • David

      Doesn’t this make comparing units vs units an erroneous comparison? Shouldn’t it be profit? If the real profit is in the game sales that continue for years after, then shouldn’t this at least smooth out (if not reverse) the declines in terms of profit? 

      Contrast that with Apple, who may face the risk that say the iPad 3/iPhone 4S are good enough for most users.  If they are, and the majority of the users only use free apps then Apple’s profit may decline in subsequent years after a peak of device sales?

    • abugida

      You’re conflating Sony’s and Nintendo’s model here, on two accounts.

      First, Nintendo was rarely aggressive in hardware pricing. I can remember of only 2 examples: When the Gamecube dropped to $99 and when the 3DS dropped to $169. Most of the time they they sold their hardware on profit, and they achieved better margins by under-speccing compared to the competition. It was Sony’s PS2 that introduced the razor and blade model, and it should be noted that PS2 made less profit than PS1 despite outselling it, and the model did not break even for either the PS3, the Xbox 1 nor the Xbox 360.

      Second, in software Nintendo doesn’t rely on 3rd party developer fees like Sony and MS do. Nintendo relies on their own 1st party titles which usually make more than half of all sales on their platforms. Just in the last generation, they had several titles that grossed more then $1 billion each (Mario Kart, New Super Mario Bros, Wii Fit on Wii; and New Super Mario Bros, Nintendogs on DS).

      Apple’s strength compared to Nintendo is that they are a much better technology company. The hardware they produce is just so much more sophisticated than Nintendo’s. But they are building general purpose devices, which is both a strength (user base) and a weakness (game quality).

  • poke

    Part of me wants to see Apple buy Nintendo. They’re similar companies philosophically, most of Nintendo’s value is in its games and Nintendo is relatively small as an organisation. Having their games catalogue as an iOS exclusive would be a nice win for Apple. On the other hand, Apple seems happy to leave games to 3rd party developers.

    • Canucker

      Not a chance that Apple will acquire Nintendo. I don’t even think they have much philosophical commonality.  Nintendo is sticking to refining what it knows and does not seem to have been willing or able to capitalize on the success of the Wii. Microsoft and Sony are trying to build virtual worlds and ecosystems in response to Apple. This will squeeze out other players by capturing and retaining buyers. The differences are in the cost of entry and the cost of maintenance. By offering compelling new hardware with high margins, it encourages repeated upgrades. Meanwhile Sony and Microsoft (and Nintendo) depend on high margin games. Apple has flipped the razor/razor blade model that everyone else was following and has clean shaven the profits.

      But Apple acolytes shouldn’t be too celebratory. Nintendo is a once successful disruptor that failed to repeat. Hence, the phenotype of disruptor is not hard-coded.

  • abugida

    Horace, Nintendo’s portable hardware sales look wrong in your graphs. Nintendo had their best portable sales in 2006 to 2009. At that time sales were about 30 million units per year, or 50 % higher than in the years before. In the GBA years, they never sold more then 20 million per year.


    • Nintendo portable unit sales in million by calendar year since 2003: 42.8, 43.8, 20.1, 25.8, 31.1, 32.2, 28.9, 19.5, 23.7.

      • abugida

        Dirk, could you provide your source for 2003 and 2004? I’m looking at the official Nintendo records. Hardware sales in millions according to Nintendo:

        Fiscal ’03 (ending March ’03): GBA 15.65; GB 0.27
        Fiscal ’04: GBA 17.59; GB 0.0
        Fiscal ’05: DS 5.27; GBA 15.4

        Sales were roughly 20 million per year in those years, not 40 million. I still think the DS would have deserved more appretiation in this parable. It is Nintendo’s best selling system ever (even more so if you look at corresponding software sales).

      • Your data is correct. You are looking at fiscal year end, I am looing at calendar year end. However, in my previous reply the 2003 and 2004 figures are incorrect.

      • abugida

        That was my point. The first 3 infographics in the article are incorrect, and also the following statements:

        “With the launch of the Wii console, Nintendo averted disaster.”

        “Nintendo was suffering from a crushing decline in sales. Their device sales had fallen from 54 million in 2003 to 22 million in 2005. Many wrote off the company”

        “each new generation of portable from Nintendo has failed to break out of a general pattern of overall decline”

        Nintendo was always doing very well in portables (with 60%+ market share ever since 1990) and by 2006 the DS had turned out to be their crowning achievement, most importantly with record software attach rates. What people were saying at that time was not that they should fold the company but that they should get out of home consoles and stick to mobile.

        Now, of course those good times of DS and Wii are over. But I think it’s important to stress again that Nintendo as a company doesn’t need to grow to survive. They just have to keep bringing out great new games. That’s all that matters to them. Come out with brilliant new game ideas, and create custom hardware to realize them. If they can do that they’ll have their USP and they’ll have their margins. Apple will never be able to beat them at that because Apple doesn’t belive in custom hardware.

      • davel

         Will their stable of games be enough to drive hardware sales? People need their phones. Even kids. They no longer need the game console because the phone does that and it goes to youtube and facebook and the web.

        If you are a casual gamer you don’t geek out over a feature. You play for a while and do something else.

        I think iOS killed Nintendo.

      • abugida

        So now that their smartphone does play Youtube, will people stop going to the cinema or subscribing to cable/Hulu/Netflix? In entertainment, quality matters.

      • davel

         Cinema will have problems when streaming of movies becomes more commonplace.

        Netflix has mostly old movies. When the studios allow first run movies to go directly to the consumer movies will die.

        Most movie theaters are small and the seats are crappy. Theaters used to be nicer. Many are just not good experiences.

      •  ios killed nintendo?

        Is this why in 2011 they were the most profitable game company selling the most hardware?

        and the 3ds breaking records?

      • Yes.

      •    ios killed nintendo?

        Is this why in 2011 they were the most profitable game company selling the most hardware?

        and the 3ds breaking records?

      • davel

         Will their stable of games be enough to drive hardware sales? People need their phones. Even kids. They no longer need the game console because the phone does that and it goes to youtube and facebook and the web.

        If you are a casual gamer you don’t geek out over a feature. You play for a while and do something else.

        I think iOS killed Nintendo.

  • abugida

    My point here is that by 2005/2006 Nintendo was not in decline but leading a videogame renaissance. Titles like Nintendogs and Dr Kawashima were drawing in tens of millions of non-gamers. With the Wii Nintendo was able to repeat that trick a second time. Now that run has come to an end, but to suggest that a non-growing company is a dead company I must say I find a little bone headed. Innovation in iOS gaming has pretty much come to a halt. We’re still looking at the same few genres that worked well in 2008, only with improved graphics. Most genres suffer under the lack of dedicated buttons. Nintendo products still bring unique value in terms of original content and input mechanisms. What Nintendo needs to work on is electronic distribution and also their software pricing.

    • BC

      But isn’t it precisely electronic distribution and software pricing that have been the most significant innovations in gaming in the last 4 years, spear-headed by the App Store and iOS devices? I would disagree that innovation in iOS gaming is at a halt; in fact, I’d say that we’re currently in a transition period where the rest of the gaming industry is still adjusting to the shock of the App Store and the mainstreaming of indy game development.

      • abugida

        Well, Horace’s theory is that gaming is “good enough” on smartphones. I don’t think that concept applies to entertainment products. Nintendo has always been about exceptionally good entertainment titles, and you have to measure their performance by that, not by being “good enough”. As for indy game development, we’ve had that in the 80s on home computers before, though I would say innovation was bigger back then than it is today. The big studios are not necessarily in shock. They’re all present on iPhone. But they know their bottom lines and they’re still making most of their money on other platforms.

        Nintendo overall is a much more conservative company than Apple. They’re not a tech company that is run like a startup. They’re a toy company that has been around for 100 years. They don’t want to be a growth stock that conquers the world. They want to make some profits on the products they sell and they’re paying dividends. One example for their conservatism was Wii production. The Wii was constantly in short supply for about 2 years because Nintendo refused to do dramatic production ramps. They were reluctant to blow the company up to a size they’ve never had before. Eventually they had to do it, and now they need to figure out how to get back down, financially.

      • davel

         I think this is exactly the thing that is killing Nintendo.

        They took the low end games and Apple took it from them. Unless they take on Microsoft and Sony where do they go? Apple has the better platform for casual gaming. Nintendo has the better franchise. Are their stable of games enough to get the casual games to support them? I don’t think so. The iOS device is simply more compelling.

        This is a tough time for Nintendo because they have to reinvent themselves and they may not have time.

      • davel

         I think this is exactly the thing that is killing Nintendo.

        They took the low end games and Apple took it from them. Unless they take on Microsoft and Sony where do they go? Apple has the better platform for casual gaming. Nintendo has the better franchise. Are their stable of games enough to get the casual games to support them? I don’t think so. The iOS device is simply more compelling.

        This is a tough time for Nintendo because they have to reinvent themselves and they may not have time.

      • abugida

        They did not take the low end. They were selling at the same $50 price points as Xbox, PS3 or classic PC games. What they did is focussing on new gameplay and input mechanisms instead of HD graphics. They focused on quality and unique experiences for their customers.

      • davel

         The game console ( up front cost ) for a Wii is less than its competitors. As you point out they alsow changed how the games are played ( made it more accessible). Their target was definitely low end gaming ( casual gaming ). They were not targeting the hard core gamers.

        The titles regardless of price were low end games. That is not as sophisticated, not as invested. Low end games.

        Apple’s devices also were geared to the causal gamer and have a better distribution method. They stole the market from them.

      •  his report is just good enough…………………..but when you take into account is false hoods, is bias and his generalizations,

        we can all see he isnt a gamer

    • JohnDoey

      Angry Birds.

      • abugida

        Which came out in 2009. Okay, I was being a bit hyperbolic.

  • Pingback: More misleading comparisons : Curiouser & Curiouser()

  • I wrote an article about this for my website, and I realised it would work well enough as a comment:

    I don’t agree with the method of deduction (Sales graphs) for several reasons:

    1) The iPad is a general use computing device. Comparing it to a dedicated portable gaming device, where sales were almost guaranteed to be lower simply by looking at the size of potential markets, is almost useless.

    2) The graphs present the various iPad models as one model, whereas the various DS models (All of which had similar incremental upgrades to the iPad) are presented separately. Perhaps the graphs would show a similar decline for the iPad models if they were presented in the same fashion as the Nintendo portables? Or is Schmidt suggesting that sales of the iPad 1 did not decline after the iPad 2 was released?

    3) The graphs give no historical context when presenting the decline of Nintendo’s consoles. Comparing the decline of Nintendo’s consoles with that of consoles produced in the 90s would better illustrate the impact the iPad is having on Nintendo.

    4) Apple release a new iPad and iPhone model every year. Schmidt doesn’t seem to take this into account, with regards to its affect on sales, when making comparisons to products with a life cycle of 5-7 years.

    5) Finally, the iPad is a novel device, which combined with the large potential market (iPad owners aren’t exclusively playing video games) means faster, higher sales figures. Schmidt could have compared sales growth of the iPad to sales of a similarly novel early games console, such as the Atari 2600.

    I want to make it clear that I’m not disagreeing with Schmidt’s conclusion, just his methods. He could be right about the effect the iPad is having on the dedicated/portable games console market, but these graphs don’t convince me of anything other than the fact that statistics can be presented in compelling ways.

    • Walt French

      “1) The iPad is a general use computing device. Comparing it to a dedicated portable gaming device, where sales were almost guaranteed to be lower simply by looking at the size of potential markets, is almost useless.”

      I suppose you own one or two of these.

      • BC

        Regarding your first point, it’s seems irrelevant to argue that since the iPad is in a different functional product category, that it’s “unfair” to make comparisons to a dedicated mobile gaming device. The reason that argument doesn’t hold water is that the iPad is fulfilling the job-to-be-done that Nintendo devices used to be hired to do. I’d call that the perfect case study of asymmetric disruption.

        (Please forgive me if I’ve created a strawman of your first point. Correct me if I misunderstood your point.)

      • I used the word “useless” in my first point, which may have been a little over the top.

        My point was this: While I understand that a significant number of iPad purchasers play games on the device, it can’t be said of ALL iPad purchasers, whereas it CAN be said of all 3DS purchasers, for example.

        It could be that half (For ease of argument) of all the purchases of iPads are by people who play games maybe once a month, and therefore the iPad couldn’t be considered a gaming device, or in direct competition with Nintendo and other portable console manufacturers, for those people.

        If the other half play games once a day, and for (Let’s say) 1 hour a day, then in those instances the iPad is very much a competitor to the 3DS. In those cases the buyer could have considered both the iPad and the 3DS, since they would be used for similar purposes, and gone for the former given that it offers more functionality.

        But in those cases where a person is using the iPad for reading news and emails, they never would have considered the 3DS as a potential alternative, and in their mind the two devices are not competing.

        It is akin to a businessman buying a desktop computer for word processing, and having that sale and others like it compared with sales of the Xbox 360.

        I appreciate that knowing exactly what percentage of iPad users play games regularly is difficult, so I also understand that building graphs around that data would be equally difficult. I just thought it should be pointed out as a qualification.

        In summary: Only the percentage of iPad purchases which are then used to play games in a similar fashion to a 3DS should be used for comparison.

        Does that make more sense? There’s a chance that I’m out of my depth in understanding why the comparison is a valid one. I’d be grateful if you could explain to me anything I’m seemingly missing.

      • davel

         I think the point that Horace is making is that Nintendo’s Wii was disruptive because it is aimed at a casual gamer not the hardcore gamer as its competition does. One of the aims of the iOS devices is as a decent casual gaming platform. The fact that they are mobile computers is irrelevant. All devices listed above are computers. The function of the iOS device is as a general purpose tool of which gaming is but one. Since most iOS games are free or cheap they have an economic one that Nintendo cannot match. Also their mobile nature makes them compelling. Nintendo cannot match the features and so will die.

        While a DS is mobile its non core gaming features are not good enough. You can get a touch for a similar price and do more. Apple killed nintendo because they play in the same casual gamer world and offer better value.

      •  apple killed nintendo?

        Is this why the 3ds is breaking speed sales records?

      •  its a completely unfair comparision. Its liek comparing total tv sales to console sales

        apples and oranges……………

    • Schmidt here. Thanks for you good points. As you are not disagreeing, but have raised valid points I want to give more clarification to the post.

      1) As BC noted below, we are looking at markets from a jobs-to-be-done perspective as part of the theory of disruption. The overlap of mobile phones & tablets with portables and consoles in gaming is very visible.

      2) We know that the iPad 1 sales stopped almost immidiatly once the iPad 2 was released. In the current generation the new iPad and the iPad two are for sale, but the timeline above does not include forecasts for this quarter. So yes, iPad 1 sales declined after the launch of the iPad 2. The difference is that in Apple’s case that was intented while in Nintendo’s case prolonging the product life cycle of the DS category was intented.

      3) We were not able to collect data that far back. 
      4) That is part of Apple’s business model. This is also linked to point 1).

      5) Here I rely on the reporting from Apple’s side, that the iPad is the fastest consumer electronics device in history. Therefore, including the Atari 2600 would not improve the analysis.

      Hope this helps.

      •  shut up moron

      • Guest

        I had similar thoughts to Anthony Hobday on seeing these charts – if the 3 iPad models are being shown cumulatively (same goes for iPhone and iPod Touch) then surely the DS, DSLite, DSi and DSXL should also be grouped.  Those four consoles are all the same platform with app compatibility across the range (the 3DS is distinct).  Since these consoles all sold alongside each other it seems they should be treated in the same way as the iOS devices, after all, you don’t break down iPad Wifi and iPad 3G.

        I’d be intrigued to know what such a chart would look like although I suspect the iPad would still stand out given the Total Nintendo Portables line on the Nintendo hardware unit sales by platform chart.

    •  you should disagree with him. Hes completely off base……….nintendo is actually the only game company thats in the clear…………

      The 3ds is breaking worldwide records, the wii will pass 100 million sold, and the wii u will be a big hit

      When you use bias data to come to bias and false conclusions you cant help but laugh

  • Tiago

    Hi Horace,
    Great article. As an avid Apple and Nintendo consumer I do hope that both of them in the long term are able to co-exist. Although for many users, an iPad or iPhone may replace a portable gaming console, for others that is not the case. I do cheer for Nintendo here, in spite of being heavily invested (all my life savings) in Apple, since I do feel the world would be a grayer place without the Super Mario creator.Sentimentalisms aside, I would just like to point a few comments regarding your post. The decline you mention from the DSLite to the DSi and later DSXL, is not a real decline. All these consoles are in fact the DS, with slight variants. The games they play are the same and they are in the same console generation. In fact, I would suggest that you present the DS data all summed up, because as I’ve stated, all the different flavours are basically the same portable. The decline is just the consequence of the ageing of the console which typically lasts 5-6 years.

    The 3DS represents a completely new generation, the first since the launch of the original DS. This is not obvious by the naming convention that Nintendo adopted recently, but 3DS represents the 4th generation of Nintendo’s portable consoles (Game Boy, Game Boy Advance, DS and 3DS). Time will tell if the 3DS will be able to survive the current menace of the smartphones and tables (particularly Apple’s). I think it will. The same I cannot say about Sony’s efforts with the Vita. I think that as the market for pure portable gaming consoles shrinks, either Sony or Nintendo will disappear. Since Nintendo basically created the market in the first place and has shown evidence of being able to adapt and “disrupt” markets previously (and also because it’s also in my top 3 companies, the others being Apple and Nikon) I do hope that it’s Sony that bites the dust.


    •  The article is ridiculous……………The 3ds is doing better than any other nintendo portable before it…….

      how do you explain that?

  • There is something here that doesn’t ad up. Tim Cook told us that the total iOS devices sold last Q was 62 million devices. Minus iPhones and minus iPads and minus AppleTV’s makes the total of iPod Touches sold i.e. 62-37.04-15.43-1,4=atleast 8,13 million iPod Touches were sold last quarter alone. That is remarkable when you remember the average selling price of over 209€.

    • Then again… what is few billion dollars between friends. 😛

    • JohnDoey

      I don’t think Apple includes AppleTV when they count iOS devices. The AirPort Extreme also runs xnu and Darwin, yet it is also not included in “iOS” or “OS X” counts.

    • The lines show trailing four quarter averages. This was done to all product lines due to the high seasonality.

    •  his numbers are bias and false. He lied. Plain and simple. This stufy should be ignored………………….

      Why dont we compare total amount of cucumbers sold to 3ds’s

      thats about as logical as the ios to 3ds leap

  • Stephen


    Sony is in the process of launching the PlayStation Vita.  I am curious about your analysis of its prospects.

    Sony has the PlayStation console business and it has the Sony Ericsson mobile handset business.  The PS Vita seems to be something in-between. 

    My sense is that hard core gamers might buy it, but that it is not really a phone and not really an iPad.  Or to put it another way, why would you want another device in your pocket?

    • Canucker

      I’m not a gamer, but the Vita to me looks like a modernized/updated PSP. It’s has the cameras and lovely screen, but is fundamentally the same device as it was when originally launched and has the same business model. Sony also tried the PlayStation Phone and it (I believe) has bombed. Ditto for abysmal sales/reviews of the two Sony tablets (so far). My bet is that Sony simply doesn’t know what its customers want. They understand there is brand affiliation and value in PlayStation but it cannot simply be plastered onto any old form factor. It must drive them crazy that they cannot sell relatively ambidextrous devices into a market where youth crave the next great thing. The key (at least against the iPad/iPod Touch/iPhone) likely has something to do with the low cost of games and the critical mass of services. How many kids are given the device as a present but then must buy games for themselves? I almost walked into a SonyStore at the weekend, but realized just in time I’d be the only non-employee there. 

      • niilolainen


      • everyone posting here isnt a gamer.

    • Sony has sold a bit more than 400 000 PSVs in Q4/2001. In Q4/2011 PSV was only on sale in Japan.

      Looking at the Ericsson “buy-out”, Sony might incorporate gaming into its phone business more strongly.

      Overall volumes for Sony have been declining from 2008 level.

      As Sony will improve its portables along the needs of its most demanding customers, I expect to see a similar finacial development for Sony’s gaming business as we have seen for Nintendo (declining revenue, gross margin, etc.).

      •  nintendo is so far profitable in 2012………you know why? they sell the most hardware and software………..

        the 3ds is kicking everythings ass

    • We’ll be doing an analysis of Sony soon.

      •  you shouldnt because you dont know anything about gaming. I can report things falsely with bias too.

  • Joe_Winfield_IL

    @Asymco:disqus, what happened to your tweet sidebar?  I always enjoy reading your twitter feed, but I’m too lazy to actually use the service directly.  It’s not loading on any of my devices today; did you take it down?

    •  I like it without the sidebar; it feels cleaner and less busy. 

    • I removed the Twitter feed from the site. As much as I like it and know some like to see it, I felt that the burden of loading it for each and every page view was unnecessary and the space it frees allows me to now post images up to 800 pixels wide.

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  • Mark

    >> The lesson here is that a company that disrupts does not necessarily survive. Long term survival depends on the ability for serial disruption.

    Couldn’t one say that the need for serial disruption depends upon existing crappy products or services in some large sectors?  Apple has gained so much from the fact that there were technology revolutions that gained a wide following but whose portal to using them was poor.  I’m not taking anything away from Apple (I’m a believer and investor) but I think Apple is a historic anomaly because of this, and I don’t know what Apple looks like in twenty years or whether it will need to continue serially disrupting to survive down the road.

    •  the lesson here is I shouldnt believe anything from this site

  • Petteri

    One thing that separates a general purpose (mobile) computer from a specialized gaming product, and might hinder or even prevent the former becoming “good enough” to act as a substitutor, is not the computing power but the input and control mechanisms.

    While I certainly agree to the fact that a certain level of casual gaming market can and will be served by general purpose products with touch screen input mechanism only, a lot of gaming pleasure is actually derived from purpose-built, extremely reactive and often complex control mechanisms that is responsive and allows the “mastery” of the game,  thus making the gaming experience more rewarding.

    The reason why Xboxes and Playstations succeeded over PC gaming was not only the standardized hardware that made the life easier for game developers, but also that they had purpose-build gaming controllers that enabled a better gaming experience than PC’s mouse-and-keyboard control (+ non-standard joystick) scheme.

    •  ios devices arent good enough they are simply shovelware transmitters

      The ds,3ds, vita,psp continue to sell really really well worldwide and that is because they want real gaming.

      But again comparing non game devices to game devices is apples and oranges

    • Is the job to be done for a pure gaming device to make gameplay complex and difficult so “experts” could enjoy mastering them? It should follow then that the more cryptic and perplexing the product the more successful it is. This seems like a recipe for narrowing your market rather than expanding it.

      • Petteri

        In my mind it goes something like this: the enjoyment of any game (be it a board game, a card game or a computer game) is relative to the difficulty of mastering the game and the time required (and for the players willing to invest) to learn and master the game. There is a sweet spot somewhere there for different target audiences with different types of games.

        You can go after the casual gamer market with simple games like Angry Birds, or you can go after the hardcore gamer market with FPS franchises like Modern Warfare.  But with the casual gamers the problem is that while you have a larger market to target, you have a huge competition over the mind share and the wallet share of the casual gamers (competition being anything from TV, movies, magazines etc.)  With hardcore gamers you have a smaller audience, but one where you might have a more competitive value proposition for these guys’ wallet and mind share.

        So the addressable market might be sizable even when the total market size is significantly smaller.


      • Petteri

         If we look at this from numbers point of view: Modern Warfare 3 sold $1 billion in 16 days – Rovio’s Angry Birds Space sold $10 million in three days.

        And Modern Warfare, as a multiplayer-oriented first person shooter with “adult content” is in as restrictive a market segment as there can be.

        My guess – based on the time and effort people put into playing these games –  is that you still have much better stickiness with MW3’s customers than you have with Angry Birds’ customers.

      • That’s the innovator’s dilemma in a nutshell. We all know how that turns out.

      • Petteri

        What is games’ job-to-be done is a complex issue. Some people are happy playing
        tic-tac-toe or a simple card game for a round or two to amuse themselves
        when they’re bored, while some other people spend their lifetimes to
        master a game like chess. Surely these two activities are not serving the same job-to-be-done.

        Actually, casual games probably have a different
        job-to-be-done than e.g.”hardcore” games. The former’s is mainly to offset
        boredom or to pass the time while waiting for something else to happen, and the latter’s is to provide a sense of personal improvement, a
        sense of wonder, or a sense of success; it’s maybe closer to a competitive sport than to passing the time.

        And if you bring party games and singing/dancing games into the mix, they also have a different job-to-be-done, one that’s more about having fun as a group than replacing boredom, etc.

        If we bring this view into the context of this article, whether or not e.g. IPad is good enough to replace specialized gaming platforms via means of disruption, my humble opinion would be the following:

        As a generic mobile computing platform iPads and the like can provide a ‘good enough’ gaming experience for a lot of casual gaming needs. And by using simple and intuitive control mechanisms of touch interface and gyroscopes, they actually can improve on the gaming experience over older generation handheld or tv-connected consoles. You can observe this in e.g. Sony integrating a touch screen interface on their PS Vita handheld console.

        However, specialized gaming platforms are typically serving the hardcore gamer market better, as they enable richer gaming experience via better controls, visuals and overall processing power. And until the games are truly photorealistic, interactions with the game world nearly unlimited, and the controls methods short of mind reading, the gaming platform is not going to be “good enough” to be replaced.

      • The dilemma is that, as a business, if you continue to serve the most demanding customers and abandon the less demanding to “lower quality” providers you will, quite simply, disappear. Audiophiles are still underserved today but the industry that was built to serve them has become a cottage industry. Perhaps this is fine. Perhaps one should be excited about new optically controlled turntables and vacuum tube amplifiers but the value these products create is measured in the market capitalization of companies. By this measure the value is negligible.

      • Petteri

        I don’t completely agree. As I understand it, the luxury brands are doing very well these days, and it’s definitely not because of lack of good enough substitutes.

        One could even say that e.g. Louis Vuitton is significantly overserving the market of “being able to carry things that don’t fit into your pocket”, but still creates more shareholder value than most of the companies that produce bags.

        It’s all about job-to-be-done, which for example is different for luxury products than for low end products.

      • Luxury brands are serving a different job, certainly. However they are not nearly as valuable as mainstream brands.

      • Petteri

        Not necessarily. Louis Vuitton Moët Hennessy has a market cap of 66B eur, Hennes and Mauritz has a market cap of 40B eur, and Inditex (owner of e.g. Zara and Massimo Dutti brands) has a market cap of 45B eur. Gap has a market cap of 10B eur. All of the

      • Petteri

        … companies above have P/E ratios around 20.

      • LVMH is a holding company of 60 subsidiary brand holding companies. The financials are summarized here:
        The LVMH group continues to acquire brands, business which used to be family owned and tied to the designer (and overwhelmingly European). Inditex has a similar business model. The industry is in a process of consolidation and has been for some time. Luxury is not a bad business, it’s just not a great business. Its growth is limited by its own need for exclusivity. The growth it does experience is through expansion to emerging markets but the saturation level is quite low by necessity. Broadening appeal would destroy the brands. The measure of quality or performance of the brand is in its exclusivity.

      • Petteri

        Depends on your definition of great business. I´m not sure if there is great business to be had in the fashion industry. In any case, it would be an interesting study subject to look at the dynamics of that industry and see if there are parables to e.g. consumer electronics industry.

        But that´s bit beside the point. My point was that it is not at all correct to assume that in every industry there is a possibility for a low end disruption with something that is good enough, or that going for a low end disruption always results in superior returns. If it did, there would be no room for premium brands to exist. Sometimes there just is no low end disruption to be had and the low end just succumbs to the price and subsequent margin erosion, whereas the premium and high end brands can command higher margins and thus create higher shareholder value. The car industry would be another prime example here, BMW and Daimler are there at the very top of the automotive industry. Granted, Toyota is holding clearly highest position but e.g. Honda, GM, Ford, etc. are behind in market cap.

        While going for a low end disruption is certainly a viable business strategy to create exceptional shareholder value, it is by no means the only one.

      • *Every* industry is susceptible to disruption. The exceptions are industries where low end disruption is illegal. Those industries are in a perpetual state of crisis and government intervention (health care, education, energy and many forms of transportation are the most visible though I’m starting to analyze entertainment as a candidate). The alternative to low end disruption is new market disruption. That is mostly what Apple does and it is a premium brand. In that sense I agree that low end is not the only growth opportunity. However, it’s important for incumbents to understand where they stand and where they are vulnerable.
        The automobile industry is a good case study. It suffers from innovation prohibition in the form of politically influenced legislation but it also has had its share of disruption, mostly coming from new brands from Japan and now Korea and soon China. It would be a great case study to describe in detail on this blog but the data needed has a substantial cost in time.

      • Petteri

        I fully agree on the points above. As a practicioning business manager my main issue with the market disruptuon model is that while it fairly well describes what happens when a market disruption happens, it is less helpful in predicting when an industry is ready for a disruption, especially a new market distuption, or why certain companies can leversge disruption better than others. This for certain must be an area of intense research, and undoubtably the person to crack the code here is in for a book deal or two…

      • LVMH is a conglomerate of 60 brands.

        Merger of luxury brands is an ongoing process. Mergers on a large scale do not indicate a healthy, growing industry.

  • Enrique Santa CRuz P.

    Poor Nintendo, they changed the way we want to play and that was very appealing to non gamers at the time, but in the long run people wanted better graphics. Microsoft disrupted even more with the kinect and there is no room for nintendo any more, I even fear for the playstation.  Regarding portable game consoles vs other portable devices I believe that the later will eventualy wipe out the competition, the same way smartphones killed the Palm, ipaq and other personal assistants. My brother bought my nefew a nintendo DSi and after the first game he wanted to surf the web with it in hotspots with poor results. He gave him a prepaid blackberry curve and he can sufr the web, play games and receive phone calls in the sme device. I dont see any future at all in the portable game consoles.

    •  dont say poor nintendo, they killed everything last year…………..

      The 3ds was the top selling real game device of 2011 in 9 months. you dont see a future for that?

      its the fastest selling game device worldwide in history?

      please, if you know nothing about gaming, dont post

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  • Just a thought, but i wonder when the gaming market will take up the apps model for game production and distribution.

    I have a feeling its only a matter of time before we see the equivalent of an android market allowing the user to purchase and download games to gaming devices, and as well as maintain a library of purchased games.  Too much of the cost of games/software is taken up in the physical production and distribution of game/software.

    • Erick

      Are you already aware of XBox Live Marketplace, Playstation Network, and Nintendo eShop?  Downloadable console games have been around for years, but are generally relegated to second-tier or low budget titles.

      Very recently Nintendo announced that, from day one, they will sell their flagship game New Super Mario Bros 2 in two ways besides physical media: as a pure download from the eShop, and also in the form of voucher cards that can be sold at retail (and activated on-demand, so that the retail doesn’t have to worry about the cost of inventory).
      Apparently the plan is to embrace digital distribution as an equal peer to physical media (for the consumer, the disadvantage of non-transferrable games is balanced by the convenience of playing multiple games without switching cartridges).  They also have similar plans for the Wii successor coming this year.

  • This is one of the stupidest  articles Ive ever read comparing non game devices to the 3ds which is currently breaking records in every region

    Why dont we compare total PC sales to consoles? everyone games on every PC right? Just like IOS devices?

  • Here are the real facts. 90 percent of ios gamers download apps. Of that only 60 or so percent download games……………….THATS IT……………….

    it is not a game device

    How does ios explain the 3ds selling better worldwide than any system ever had

  • “The 3DS benefited temporarily from a price cut but it seems to be returning to a well-worn trajectory.”

    you mean being the number 1 system in the world?

    “The data points a bleak picture for Nintendo.”

    false data sure does

    “The Wii was a success
    due to its competitiveness vs. non-consumption of gaming. ”

    You dont know anything about gamign so how can you say that?

    “Good enough games on phones and
    mobile computers are taking consumption away from dedicated consoles,
    both fixed and mobile.”

    false. Theres really no research, legit research that says that

    “In addition, the rate at which game experiences are improving on iOS
    imply that they will overtake the “quality” of consoles in the not too
    distant future”

    HAHAHAHAHA do you play games moron?  experiences arent even at original gameboy level. They arent improving and without physical controls will only get worse

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