"Every other console is outdated as of today."

[TheGrayGhost]

Lesson #8

Wii Fallacy #8: Nintendo desperately needs to make the Wii a success.

Short Answer: Sony and Microsoft are the desperate ones. Nintendo is sitting fat with the DS.

Long Answer: There are three simultaneous myths all operating in concert to give us the frequent “Nintendo is doomed!” mantra. The first two are invincibility myths given to Microsoft and Sony. The third is the vulnerability myth given to Nintendo. Let’s address the latter first.

Nintendo has a war chest of around eight billion dollars. Nintendo could put out a couple of Xbox type financial flops before the company became in serious trouble. Since Nintendo gets money on almost everything it does, the decline at Nintendo has been in its profits. Any profit, no matter how small, is preferable to a loss. And any loss, no matter how small, is worse than coming even. While Nintendo and Sega have many things in common, their business acumen is worlds apart.

While Microsoft and Sony have many advantages over Nintendo, Nintendo does have something the others do not. Nintendo is a rare hybrid of software and hardware company. This allows Nintendo to create a speaker in the remote as well as other odd innovations. The small nature of the company, which many pointed to as a liability, has become an asset as that allows Nintendo to swiftly change to a disruptive business model. One day, we will know of the internal fights going on in Nintendo as the ‘new way’ of thinking became dominant.

Sony is seen as ‘invincible’ due to the prior success of Playstation 1 and 2. The myth of ‘brand recognition’ is used primarily for Sony’s ‘invincible’ status. But if you look through console history, Atari, Sega, and Nintendo made their biggest splash when they had no name recognition. Even worse, when the Playstation 1 was launched, Sony stayed away from its brand.

To say that Sony is betting the entire company on PS3 is not an understatement. The future of Blu-ray depends on the future of the PS3. The future for most of Sony’s digital content plans also depends on the PS3. Much of the Cell chip depends on the PS3. If the PS3 fails or disappoints, Sony, like a giant enemy crab, will be massively damaged. Listen to the investors complaining at Sony for the company’s future depending so heavily on their video game business. Even Kutaragi admits Sony’s hardware is in a period of decline. The company is still facing major troubles and there is no more vulnerable time period than transition.

Microsoft’s myth of invincibility comes from its dominance from its Windows OS and Office applications. Microsoft just won’t be running out of money (like Sega did). But look closer. Why is Microsoft in the console market in the first place?

The PC market has reached saturation. The only people buying new PCs are those replacing their broken PCs or hardcore gamers updating for new games. Prices for PCs have astoundingly fell sharper and sharper with each year. The main reason why Windows was so successful was because it was seen as ‘free’ due to it being bundled with every system. But as prices fall, the cost of Windows is beginning to stick out like a sore thumb. In overseas markets, many PC buyers opt for Linux instead which is completely free. Windows also faces major security problems. Vista keeps being delayed. Apple can ship their new OS while Microsoft cannot.

Nothing lasts forever. Microsoft knows that it cannot always rely on the cashflow from Windows or Office. Windows has foundational problems of security issues that cannot easily be solved. In other words, the ‘house’ of Windows is currently on fire. Strategies such as ActiveX made Microsoft successful against Netscape but, in turn, exposed the entire Windows platform to insecurity problems which have not ceased to this day.

Microsoft is desperately trying to create a new platform. Look at WMA and how fast Microsoft abandoned it when Apple’s Ipod took over. Look at how Microsoft is jumping head-first into the portable music playing business with Zune. Microsoft is all over the place trying to create new platforms. Outside of Office or Windows, when was the last time Microsoft had a hit? How many failed platforms has been established? Active-X, .net, WMA, on and on the list goes.

Since one of the key buyers of new computers are hardcore gamers, it is very important for Microsoft to keep game developers using Direct X (as opposed to the growing interest in Open GL). As many games make their way to consoles, they are leaving Direct X. Microsoft’s Xbox exists partly to keep game developers on Microsoft’s format. Xbox Live is another platform Microsoft hopes to become as profitable as Windows one day. Unfortunately, the first Xbox lost around four billion dollars. The Xbox 360, so far, is performing just as bad.

The Wii could end up becoming a Gamecube, and Nintendo would still be swimming in money. But what happened if the Xbox 360 or PS3 end up becoming a Gamecube? Microsoft could easily pull the plug on the Xbox Project (as many in the company desire). Sony must have the PS3 be a success. It is not Nintendo who needs to be successful with its console. The desperation is with Microsoft and Sony and will become more apparent to observers once the disruption gains traction.

Lesson over.

 

[Horrorfan]

Grey Ghost, I will bet you $50 that when all 3 consoles are out, wii will be third place in terms of console sales...

 

[TheGrayGhost]

Grey Ghost, I will bet you $50 that when all 3 consoles are out, wii will be third place in terms of console sales...

In any case, it will be first in terms of profit, as Nintendo has always been.

Anyway, you're the missing the point. What I was trying to do is encourage less shallow and jaded perspectives on what Nintendo is attempting to do. I personally DO think that the disruption strategy will work and Nintendo to gain the most market share, but I couldn't care less, really.

Did you even read the lessons?

 

[Horrorfan]

In any case, it will be first in terms of profit, as Nintendo has always been.

Anyway, you're the missing the point. What I was trying to do is encourage less shallow and jaded perspectives on what Nintendo is attempting to do. I personally DO think that the disruption strategy will work and Nintendo to gain the most market share, but I couldn't care less, really.

It makes more profit, yes, because it's machines are way cheaper and less technologically advanced. The other two make bigger profits overall though (Sony and Microsoft CREAM nintendo in terms of total profit), so they can afford to make more losses on technological advances, while Nintendo focuses on a niche, smaller hardcore market to make it's money.

 

[Horrorfan]

Also, it could be argued that Nintendo HAVE to go down the more gimmick inspired route and make cheaper machines, as because as a whole as a company, it makes far less than sony and microsoft, so it wouldn't be able to afford the losses it would make on a true next gen console.


Im not knocking nintendo, just bringing up things you ignore and or dont know about.

 

[Matt]

Also, it could be argued that Nintendo HAVE to go down the more gimmick inspired route and make cheaper machines, as because as a whole as a company, it makes far less than sony and microsoft, so it wouldn't be able to afford the losses it would make on a true next gen console.


Im not knocking nintendo, just bringing up things you ignore and or dont know about.

And your argument is wrong. Gamecube won this console generation. Regardless of sales, the highest profit was enjoyed by Nintendo. Nintendo consistently makes more money than the competition. Why else do you think it has been second and third respectively in the past two generations and continues to go strong? Because they are making money. More than Sony. More than Microsoft. Nintendo has the right idea. Cheap production costs + Cheap prices + Quality products = **** load of money.

 

[Matt]

It makes more profit, yes, because it's machines are way cheaper and less technologically advanced. The other two make bigger profits overall though (Sony and Microsoft CREAM nintendo in terms of total profit), so they can afford to make more losses on technological advances, while Nintendo focuses on a niche, smaller hardcore market to make it's money.

No, they don't make bigger profits. Learn what profit is. They make bigger gross sales. Nintendo's net gains are higher, and anyone who takes an elementary business class will tell you, net gain is what matters.

 

[Fenrir]

Try it without resulting to crudity--Dew

 

[Fenrir]

In any case, it will be first in terms of profit, as Nintendo has always been.

And how does that help the gamer?

I mean, I get so tired of seeing movie studio and console fanboys rave about how much "profit" their favorite company has churned out annually yet can't grasp the simple fact that they get **** out of it. The only ones who are not pretending to be happy at such successes are the shareholders and the suits. So please, don't bring this asinine point up again. Ever.

Anyway, you're the missing the point. What I was trying to do is encourage less shallow and jaded perspectives on what Nintendo is attempting to do. I personally DO think that the disruption strategy will work and Nintendo to gain the most market share, but I couldn't care less, really.

Did you even read the lessons?

Oh, so the gamers who are not interested in Nintendo's model are now shallow and jaded? Will you just shut up already?

By the way, I posted a lengthy ass reply about Nintendo's strategy in one of your earlier threads that recieved no response whatsoever.

 

[TheGrayGhost]

And your argument is wrong. Gamecube won this console generation. Regardless of sales, the highest profit was enjoyed by Nintendo. Nintendo consistently makes more money than the competition. Why else do you think it has been second and third respectively in the past two generations and continues to go strong? Because they are making money. More than Sony. More than Microsoft. Nintendo has the right idea. Cheap production costs + Cheap prices + Quality products = **** load of money.

Also, aren't Sony and Microsoft losing billions of dollars?

And saying that Nintendo consoles are less technologically advanced is a blanket statement. I can easily say that the Wiimote itself utilizes more advanced technology than Xbox or Playstation. It's also better at certain things than the other two console. As Perrin Kaplan keeps saying, "it's a ferrari under the hood."

 

[Horrorfan]

And your argument is wrong. Gamecube won this console generation. Regardless of sales, the highest profit was enjoyed by Nintendo. Nintendo consistently makes more money than the competition. Why else do you think it has been second and third respectively in the past two generations and continues to go strong? Because they are making money. More than Sony. More than Microsoft. Nintendo has the right idea. Cheap production costs + Cheap prices + Quality products = **** load of money.

LOL......that's like saying making a dollar when spending fifty cents is preferably to spending a million and making two....it may make more of a profit, but it doesn't make as much money. It doesn't have as big an audience, and the ONLY reason it makes any profit is because it does cheap ass software.

So it doesn't make as much money, and it doesn't have as big an audience, thus it doesn't win. Like I said I would rather make two million after spending a million, than a dollar for spending fifty cents.

 

[Fenrir]

No, they don't make bigger profits. Learn what profit is. They make bigger gross sales. Nintendo's net gains are higher, and anyone who takes an elementary business class will tell you, net gain is what matters.

Microsoft as corporation makes more annual profit and has bigger reserves (arguably one of the highest in any industry) than both Nintendo and Sony combined. And don't try to play the "business class" card on me. I'm currently in my third year of BBA in Entrepreneurship. If you want to get more technical, then bring it on.

*straps on gloves*

 

[TheGrayGhost]

And how does that help the gamer?

What's your point? I never said that it does help the gamer. Your taking my statements out of context.

Oh, so the gamers who are not interested in Nintendo's model are now shallow and jaded? Will you just shut up already?

No. Again, you're taking my statements out of context.

By the way, I posted a lengthy ass reply about Nintendo's strategy in one of your earlier threads that recieved no response whatsoever.

Huh. I seem to remember it. But I think that was when Nintendo announced all of the Wii-information at the New York event. Sorry.

 

[Horrorfan]

http://forum.pcvsconsole.com/viewthread.php?tid=11760

read it and weep, buddies..

Sales
Microsoft: $34.27 billion
Nintendo: $4.26 billion
Sony: $63.23 billion

Profits
Microsoft: $8.88 billion
Nintendo: $0.57 billion
Sony: $0.98 billion

Assets
Microsoft: $85.94 billion
Nintendo: $9.06 billion
Sony: $68.04 billion

Market Value
Microsoft: $287.02 billion
Nintendo: $12.80 billion
Sony: $38.00 billion

 

[Horrorfan]

http://www.techzonept.com/archive/index.php/t-68095.html

Nintendo's profits plunge 70%

 

[Horrorfan]

Microsoft as corporation makes more annual profit and has bigger reserves (arguably one of the highest in any industry) than both Nintendo and Sony combined. And don't try to play the "business class" card on me. I'm currently in my third year of BBA in Entrepreneurship. If you want to get more technical, then bring it on.

*straps on gloves*

You're owning people all over the place lately

 

[TheGrayGhost]

http://www.techzonept.com/archive/index.php/t-68095.html

Nintendo's profits plunge 70%

http://wii.ign.com/articles/736/736994p1.html

Zenien posted this earlier. Hopefully she'll weigh on this.

Are the figures you posted first based on Microsoft and Sony's role in the video-game industry, or as general businesses?

 

[Matt]

Microsoft as corporation makes more annual profit and has bigger reserves (arguably one of the highest in any industry) than both Nintendo and Sony combined. And don't try to play the "business class" card on me. I'm currently in my third year of BBA in Entrepreneurship. If you want to get more technical, then bring it on.

*straps on gloves*

Microsoft as a corporation is not limited to the consoles. Which we are discussing. That is like if I added on Nintendo's profits to Apple computers. We're talking console profits here, not how much money the biggest corporation in America brought in last quarter.

 

[Matt]

http://wii.ign.com/articles/736/736994p1.html

Zenien posted this earlier. Hopefully she'll weigh on this.

Are the figures you posted first based on Microsoft and Sony's role in the video-game industry, or as general businesses?

They are posting figures of the corporation Microsoft, not simply the profits of the Microsoft X-Box or Microsoft 360.

 

[Horrorfan]

I'm comparing all three as buisnesses, the only true measure of each companie's worth.


My point is, Nintendo can't afford to spend as much developing new tech (and no, a glorified light gun DOESN'T count) as either sony or microsoft. They make huge profits on software, thus they can afford to loose more.


Here are more recent figures from this year:

http://forum.pcvsconsole.com/viewthread.php?tid=11760&page=8

The most recent numbers are as of March 3, 2006.

Sales
Microsoft: $41.36 billion
Nintendo: $4.81 billion
Sony: $66.80 billion
Electronic Arts: $2.86 billion

Profits
Microsoft: $13.06 billion
Nintendo: $0.82 billion
Sony: $1.53 billion
Electronic Arts: $0.26 billion

Assets
Microsoft: $67.26 billion
Nintendo: $10.47 billion
Sony: $86.38 billion
Electronic Arts: $4.33 billion

Market Value
Microsoft: $279.02 billion
Nintendo: $19.06 billion
Sony: $47.75 billion
Electronic Arts: $15.75 billion

 

[TheGrayGhost]

... Heck, the controls, feel and premise of Zelda games since Ocarina of Time have basicially pretty much stayed the same.

Have you played the games?

Majora's Mask, for instance, takes the day/night system introduced in Ocarina of Time and focuses, quite boldly I might add, entirely on it. In fact, the whole game is tailored to this system, and it affects the gameplay mechanics dramatically in every possible way. The addition of masks that change your character is also a huge evolution. And although I haven't played much of Wind Waker yet, I've read that the sailing, is huge aspect of the game that takes a new spind on the beloved franchise. And as I play more, I'll be sure to inform you of the innovations.

 

[Horrorfan]

[BLACKOUT][/BLACKOUT]

They are posting figures of the corporation Microsoft, not simply the profits of the Microsoft X-Box or Microsoft 360.

It's the only way to compare who's winning the ''war'', as opposed to battles here and there.

Heck EA by itself is worth almost as much as Nintendo alone.

 

[Fenrir]

Microsoft as a corporation is not limited to the consoles. Which we are discussing. That is like if I added on Nintendo's profits to Apple computers. We're talking console profits here, not how much money the biggest corporation in America brought in last quarter.

But how do you know Nintendo's CONSOLE profits per se? Nintendo's earnings reports takes both console AND handhelds into account. And a significantly large portion of Nintendo's profits are from the handheld market. Nintendo fanboys rave about Nintendo's TOTAL annual profits as a corporation and not just that of one specific division. So why can't the same be admissible in the case of Microsoft?

 

[Fenrir]

Have you played the games?

Yes. Please don't ask the question again.

Majora's Mask, for instance, takes the day/night system introduced in Ocarina of Time and focuses, quite boldly I might add, entirely on it. In fact, the whole game is tailored to this system, and it affects the gameplay mechanics dramatically in every possible way. The addition of masks that change your character is also a huge evolution. And althiugh I haven't played much of Wind Waker yet, I've read that the sailing, is huge aspect of the game that takes a new spind on the beloved franchise. And as I play more, I'll be sure to inform you of the innovations.

Like I said, all the Zelda games are basically the same since Ocarina of Time, save for a few gameplay mechanics and a fresh coat of paint, which is like, the standard formula for sequels in the industry that Nintendo fans are oh-so-proud of lambasting at for being "stale" and "unimaginative". Take away the day/night system from Majora's Mask and Wind Waker's sailing element and the cartoony visuals and then try telling me just how incredibly different or boldly inventive are those games from other Zelda games.

 

[Horrorfan]

But how do you know Nintendo's CONSOLE profits per se? Nintendo's earnings reports takes both console AND handhelds into account. And a significantly large portion of Nintendo's profits are from the handheld market. Nintendo fanboys rave about Nintendo's TOTAL annual profits as a corporation and not just that of one specific division. So why can't the same be admissible in the case of Microsoft?

Don't you get tired of kicking ass?