What is specifically attractive to developers is that they can sell a title at $10 - and make more money per sale than a console product gives them priced at $35.
And you will be dreaming to think they will stay at that price. If you are correct and some large games come to the iPhone/iPod the games will be priced at the US$35 like the other devices.
In addition, right now, Nintendo limits downloads to 40 MB. There is no limitation for the App Store if you're using WiFi or your computer network for it.
One app with turn by turn directions is about 800 MB.
And there is no WiFi limit via the PSP PSN either, with some games over a GB in size.
I'm surprised Nintendo is only now figuring this out.
People want multi-use devices. Who wants to carry around a cellphone, iPod and Gameboy when you can get all those features in a single device?
Nintendo would be smart to start porting their games to iPhone. Amazing how Apple is making all these behemoth companies quake in their boots over the iPod and iPhone. I love watching it all play out.
There is a government department you can lodge a complaint with if the company who sold it won't come to the party when it comes to repairs.
But at the end it varies by item and price etc
I read the information in those two links. There's a lot of wiggle room there. But is seems difficult to prove it's a defect, according to Mr. H and another here.
Yes you are quite correct, Nintendo sells their systems to people that want to play games. Apple has sold their systems as primarily a media player, or a phone, but not primarily a games machine, while it may very well be a very good games machine, not all purchases of the device are going to play games on it.
That's correct. Apple's machines are much more of a general purpose machine than the DS is. But people, it seems, are choosing to buy a lot of games.
Now, I don't know whether the iP/T will ever eclipse the DS line (or whatever comes after) as a game playing machine or not. But with the amount of sales Apple is likely to generate over the next few years, there will be so many of them out there, that a lot of games will be sold through them.
Another thing is that "gamers", that is, people who primarily play RPG and FPS games seem to think that if those aren't the primary games selling on a platform, it;s not a game machine. We've all seen the studies that show that the vast majority of games are not those types. The sales numbers may seem as thought they are, but even 7 million of a title sold isn't very much when considering how many people play games, and a lot of games.
One question is relevant, I think. If the DS has, and I'm just making a number up here for the purpose of the discussion, 100 million games sold through it in a year, and most of those games are sold as a "hit", and so few titles, relatively, are told, and the iP/T has a 100 million games sold through it a year, in smaller increments through many more titles, is either one more of a game machine than the other?
I don't think so.
Quote:
Look at the Wii for example, it has sold the most out of the current generation of consoles, but has the lowest attachment rate of them
These things are hard to quantify. My daughter has so many games for each console, going back to before the Game Cube, that it's hard to tell what attachments rates she has.
I'm surprised Nintendo is only now figuring this out.
People want multi-use devices. Who wants to carry around a cellphone, iPod and Gameboy when you can get all those features in a single device?
Nintendo would be smart to start porting their games to iPhone. Amazing how Apple is making all these behemoth companies quake in their boots over the iPod and iPhone. I love watching it all play out.
I do. I carry my iPod as a music player, iPhone as a phone and my DSi as a gaming device.
In addition, right now, Nintendo limits downloads to 40 MB. There is no limitation for the App Store if you're using WiFi or your computer network for it.
One app with turn by turn directions is about 800 MB.
Oh yeah, and Nintendo does not have an app store for games!
This was an interesting piece by Charles Cecil - on releasing "Under a Steel Sky" for iPhone.
<from Eurogamer>
The iPhone OS has almost as many unit sales under its belt as the PSP. So it is becoming a credible platform.
What is specifically attractive to developers is that they can sell a title at $10 - and make more money per sale than a console product gives them priced at $35.
It is the App store which is making Nintendo nervous. Not the iPhone hardware per se.
I read the information in those two links. There's a lot of wiggle room there. But is seems difficult to prove it's a defect, according to Mr. H and another here.
That's correct. Apple's machines are much more of a general purpose machine than the DS is. But people, it seems, are choosing to buy a lot of games.
But the example you gave me was a very small attachment rate for that game and for the number of devices sold.
Quote:
Originally Posted by melgross
Another thing is that "gamers", that is, people who primarily play RPG and FPS games seem to think that if those aren't the primary games selling on a platform, it;s not a game machine. We've all seen the studies that show that the vast majority of games are not those types. The sales numbers may seem as thought they are, but even 7 million of a title sold isn't very much when considering how many people play games, and a lot of games.
If you are referring to the COD4 example I have, that 7 million was in the first few months, not the total sales.
Quote:
Originally Posted by melgross
These things are hard to quantify. My daughter has so many games for each console, going back to before the Game Cube, that it's hard to tell what attachments rates she has.
Not really, take the number of games sold, divide by the number of consoles sold, you have the attachment rate.
You are a strange one.... Maybe you should have a look before talking
A built in App store which allows you to download games into the DS/ DSi wirelessly. Don't call people names. You are just good at picking quarrels with people. Tsk Tsk Tsk.
A built in App store which allows you to download games into the DS/ DSi wirelessly. Don't call people names. You are just good at picking quarrels with people. Tsk Tsk Tsk.
Nintendo is very profitable. They've done an amazing job this generation with the cheap Wii, and the DS over the past five years.
Agree.
Quote:
Originally Posted by melgross
Nintendo had a major drop in profit this quarter. not a slight slump. 66% is considered major by any standards. And Apple's computer sales weren't down by 8% year over year. The last quarter they were up 4%. They were down a few percent earlier, but then, the industry was down much further, and still is, even though Apple's sales were up.
Apple has not had a profit drop. In fact, this was their best non holiday quarter ever.
Mac revenue was down 8 %. I was comparing revenues of Nintendo and the Mac business which were both down. What was Mac profit? We don't know, Apple won't tell, but I would guess it should be down, too. Most Apple businesses were down last quarter by the way.
Quote:
Originally Posted by melgross
The iP/T have been out for two years. The DS line, for five years. For Apple to have sold that much product in two years is pretty serious.
Agree. My intent here was to add facts that were missing in the news story. Are you denying that the AI report failed to represent both sides?
Quote:
Originally Posted by melgross
Apple's iP/T sales will continue to increase. somehow you have the notion that sales will continue at 30 million units a year. They won't. Next year, Apple will sell considerably more, and considerably more the year after that. It looks as though Nintendo's DS sales will remain about the same.
Apple will surpass them in three years.
2012 is fine be me, we can agree on that. I saw you claiming earlier that the iPhone will surpass them by 2010. That's why I posted those figures. Apple is very unlikely to catch up 60 mn within 18 months.
Quote:
Originally Posted by melgross
You seem to forget that the App Store has only been open for one year. Look to yearly sales of games, not the total over time. How do you expect to compare the past five years totals with the totals of the first year?
I did not compare totals, that must be a misunderstanding. Apple is regularly announcing download figures and I merely calculate the mathematical difference between those milestones and the elapsed time and the resulting attach rate which is 4 to 5 apps per month. See below.
I also think it's intuitively logical that a user of a dedicated games devices will be willing to spend more on games on average than a user of a phone.
Quote:
Originally Posted by melgross
How many games sold for the DS the first year? Do you know?
You can look up all of Nintendo's financial history on www.nintendo.co.jp/ir/en. They're also making beautiful Annual Reports by the way.
DS software shipments between Nov 04 and Mar 05 were 10 mio units. Hardware shipments 5 mio units.
So 2 games or roughly $80 per user in the first 5 months. A lot higher than what an iPhone OS user spends on software per month.
Quote:
Originally Posted by melgross
Apple makes several times as much profit on an iPhone as the sales price for the DS. They likely make almost as much profit off the iPod Touch as the price of the DS. Apple isn't that interested in making money off the software. Nintendo MUST make money off the software.
If we're talking about 3rd party developers software revenue matters to both platforms. I think, like me, you have read dozens of complaints by developers that AppStore pricing is deteriorating. I seem to remember that John Carmack was one of them. He said something like "If $10 games are punished by the AppStore shoppers there can be no big budget games on the iPhone."
Quote:
Originally Posted by melgross
Nintendo sells machines to make money off software sales. Apple sells software to make money off hardware sales.
You have to understand this in order to understand the difference between the two companies.
The DS is likely priced lower than Nintendo would have to price it if it weren't for software licensing income.
Nintendo is a toy company, not a software company. They're selling hardware and software, with their hardware merely adequate for their software, so software surely dictates hardware for them. But that is not conclusive proof that their hardware is unprofitable or less profitable. I believe that both are essential to their business.
Both the Wii and the DS were launched years ago, and when they launched, Nintendo said they're selling at profit. Since then Nintendo will surely have been able to take advantage of optimizations and falling component prices, yet they have not (or rarely) dropped their prices.
The Wii is still selling for $249 like in 2006. Compare that to the GameCube which was launched at $249 in 2001 and sold for $99 by 2003--at profit, according to Nintendo. Compare it to Apple's massive yearly price drops for the iPod nano which did not hurt Apple's margins. I have no doubt that Nintendo could now sell the Wii at profit for $149 should the competition demand it, but they don't, so there's a large part of $100 in pure creamy profits right now.
Similarly, the DS was launched for $149 5 years ago and is now selling for $129, only 15 % lower than in 2004. In Europe it is still selling at the full price because it's so popular. Again, Nintendo's margin must have risen higher and higher every year.
Quote:
Originally Posted by melgross
Actually, downloads are speeding up. You can't look at the first two or three months, and extrapolate from that alone. Downloads went from nothing when the store opened to what seemed to be a large amount at the time, but is dwarfed by current use.
You will have to show something that proves what you are saying about growth.
Sure. Here's some page I just made in iWorks, based on the milestones Apple announced:
It shows that daily downloads have risen only slowly in the first half of 2009, slower than new devices were sold. I'm not saying there's a drop (which the second graph suggests) because that is probably normal seasonality than is also familiar from iTunes music sales, but the attachment rate is not rising anymore. It's about 4 to 5 downloads per month per device.
At the same time many developers are saying average prices are dropping. I don't know if it's true or not. Back in August 08 (long before $0.99 became dominant in the AppStore) Steve Jobs told the WSJ that the average price per download was $0.50 (including both free and paid downloads). I'm estimating it's $0.20 now, therefore claiming that the average user spends $1 per month on the AppStore. Maybe it's $2, who knows. One thing is a fact: DS customers are spending $10 per month per user for DS software.
Quote:
Originally Posted by melgross
And no one is saying that Apple is steamrolling over Nintendo except for your remake just now.
Seemed to be the tone in the article and this thread.
Quote:
Originally Posted by melgross
All I've said is that Apple is causing problems for them, and over time, sales of the iP/T will exceed that of the DS.
You've claimed more than that, including that 2010 forecast of yours.
Quote:
Originally Posted by melgross
But at some point, Nintendo will, I expect, discontinue the DS series as they have the others before it, and will replace it with a more advanced model. They will have to.
If that model offers more, then they may be able to stave off the loss of the number one position. Of course, it would have to be backwards compatible. We'll just have to see.
If you're counting gaming devices, Nintendo will remain number one, because the iPhone and iPod Touch are not gaming devices. Number one position by hardware of whatever kind, as long as it can play games, would be the 500 million devices of Series 40 line Nokia sold... Of course not meaningful.
If you call the AppStore the main threat to Nintendo, you have to compare the AppStore to Nintendo's software sales, in which Nintendo is clearly number one and will remain so for a long time. There's no way around it.
You are so very wrong. Apple is catching up. In two years they have sold half as many units of iP/T as Nintendo sold DS's in five years. That tells you nothing?
Um, Nintendo have also sold half as many units in 2 years as they've sold in 5 years. The point is, they're dedicated gaming devices with vastly better software $ attach rates.
Quote:
Originally Posted by melgross
And you are not looking into the markets in which both companies are selling.
Nintendo is selling into what has seemed to be a fairly mature handheld game machine market. Just two companies, them and Sony. Now there is a third.
The cycle is maturing, however Nintendo has doubled the market size between 2004 and 2008. It was a very dynamic market even before Apple entered. Nintendo, through their innovation, have killed dozens of direct competitors in the handhald market. The PSP is only the latest casualty.
Quote:
Originally Posted by melgross
Apple is now selling into a quickly growing market, the smartphone market. Two years ago when the iPhone came out, smartphones were 10% of the overall phone market of about a billion phones a year.
Apple captured 10% of the smartphone market which is what they announced they wanted to do (before the phone came out).
But smartphones are rapidly growing as a percentage of the phone market. Apple is selling into that rapidly growing market. Apple has about 11% of it.
So, even if Apple doesn't raise their percentage of that market, their sales will grow at a good rate. It's estimated that a few years from now, smartphones will be 75% of the phone market. Even if the overall market didn't grow, not very likely, then that would be a least 750 million smartphones, of which Apple would have 11% of, or about 82 million phone sales a year. As the Touch is selling at the rate of between one third to one half of that of the iPhone, there could be anywhere from 27 to 41 million of them selling each year as well. That would be a total of over 109 million units a year, to as much as 123 million units a year.
And that assumes that Apple's phone doesn't increase its marketshare, and the phone market doesn't grow.
Like you I'm very confident that Apple will be a leader in smartphones and sell more than 100 million devices per year. I'm very much looking forward to the time when smartphones, not PCs, will be best selling computing devices, because then the lethargy of the Microsoft Decades will finally be broken and we will see a lot more innovation and progress.
However, if you told me that Apple will reach those figures very soon, I would ask you: On what network? The infrastructure is just not there. And the plans are too expensive. And the phones are too expensive. If 75 % of the world wide market (including Latin, America, Africa, Asia...) should be smartphones, then a smartphone should cost no more than $100 on average, without contract. Because that is the ASP of a non-smart phone today. That time is one decade away, and it's idle to speculate how exactly Nintendo will look by then. Who knows, they might sell Android or Symbian based gaming handhelds with 4G chips by then, but it's really awfully far away.
By the way, when did Apple announce they want 10 % of the smartphone market? Source? I only recall 1 % of the phone market. I would also like to see a source for that "75 % will be smartphones" estimate, if you have one handy.
Quote:
Originally Posted by melgross
There is no way that Nintendo will ever sell over 100 million handheld units a year.
If $ attach rates for iPhone games don't improve, Nintendo doesn't have to. 30 million Nintendo handhelds per year could match the game sales of 300 million iPhones per year.
That's because Nintendo gets much of it's profits from software licensing.
Actually from their own games. Software licensing is probably #3 after hardware profits.
Quote:
Originally Posted by melgross
That's always more profitable than selling hardware. Why do you think that MS makes so much profit on their sales?
Because Windows and Office are monopolies? Windows Mobile is not profitable for example because it's selling for a lot less than Windows due to strong competition on the mobile phone market. It really depends on your business, there is no general rule if software or hardware are more profitable. Apple and Nintendo seem to agree that the total package can deliver the most value and therefore the highest profits.
Quote:
Originally Posted by melgross
Apple's operating margins are a bit lower than that.
Because of subscription accounting. If you look at the Non-GAAP net profit you know where the train goes with GAAP operating profits: above 20 %.
Quote:
Originally Posted by melgross
Apple doesn't actually drop prices for the latest products. The iTouch line goes for $229. $299, $399.
The iPod Touch 1G was $300 to $500. 2G is $230 to $400. Sure it's a price drop. And Tim Cook (from what I recall) said it was an aggressive move and would lower margins in an earnings call last fall.
Comments
What is specifically attractive to developers is that they can sell a title at $10 - and make more money per sale than a console product gives them priced at $35.
And you will be dreaming to think they will stay at that price. If you are correct and some large games come to the iPhone/iPod the games will be priced at the US$35 like the other devices.
In addition, right now, Nintendo limits downloads to 40 MB. There is no limitation for the App Store if you're using WiFi or your computer network for it.
One app with turn by turn directions is about 800 MB.
And there is no WiFi limit via the PSP PSN either, with some games over a GB in size.
People want multi-use devices. Who wants to carry around a cellphone, iPod and Gameboy when you can get all those features in a single device?
Nintendo would be smart to start porting their games to iPhone. Amazing how Apple is making all these behemoth companies quake in their boots over the iPod and iPhone. I love watching it all play out.
There is a government department you can lodge a complaint with if the company who sold it won't come to the party when it comes to repairs.
But at the end it varies by item and price etc
I read the information in those two links. There's a lot of wiggle room there. But is seems difficult to prove it's a defect, according to Mr. H and another here.
Yes you are quite correct, Nintendo sells their systems to people that want to play games. Apple has sold their systems as primarily a media player, or a phone, but not primarily a games machine, while it may very well be a very good games machine, not all purchases of the device are going to play games on it.
That's correct. Apple's machines are much more of a general purpose machine than the DS is. But people, it seems, are choosing to buy a lot of games.
Now, I don't know whether the iP/T will ever eclipse the DS line (or whatever comes after) as a game playing machine or not. But with the amount of sales Apple is likely to generate over the next few years, there will be so many of them out there, that a lot of games will be sold through them.
Another thing is that "gamers", that is, people who primarily play RPG and FPS games seem to think that if those aren't the primary games selling on a platform, it;s not a game machine. We've all seen the studies that show that the vast majority of games are not those types. The sales numbers may seem as thought they are, but even 7 million of a title sold isn't very much when considering how many people play games, and a lot of games.
One question is relevant, I think. If the DS has, and I'm just making a number up here for the purpose of the discussion, 100 million games sold through it in a year, and most of those games are sold as a "hit", and so few titles, relatively, are told, and the iP/T has a 100 million games sold through it a year, in smaller increments through many more titles, is either one more of a game machine than the other?
I don't think so.
Look at the Wii for example, it has sold the most out of the current generation of consoles, but has the lowest attachment rate of them
These things are hard to quantify. My daughter has so many games for each console, going back to before the Game Cube, that it's hard to tell what attachments rates she has.
I'm surprised Nintendo is only now figuring this out.
People want multi-use devices. Who wants to carry around a cellphone, iPod and Gameboy when you can get all those features in a single device?
Nintendo would be smart to start porting their games to iPhone. Amazing how Apple is making all these behemoth companies quake in their boots over the iPod and iPhone. I love watching it all play out.
I do. I carry my iPod as a music player, iPhone as a phone and my DSi as a gaming device.
In addition, right now, Nintendo limits downloads to 40 MB. There is no limitation for the App Store if you're using WiFi or your computer network for it.
One app with turn by turn directions is about 800 MB.
Oh yeah, and Nintendo does not have an app store for games!
This was an interesting piece by Charles Cecil - on releasing "Under a Steel Sky" for iPhone.
<from Eurogamer>
The iPhone OS has almost as many unit sales under its belt as the PSP. So it is becoming a credible platform.
What is specifically attractive to developers is that they can sell a title at $10 - and make more money per sale than a console product gives them priced at $35.
It is the App store which is making Nintendo nervous. Not the iPhone hardware per se.
C.
+1. I completely have to agree with that, sir.
We are going to see Microsoft, Sony and Nintendo move increasingly towards direct-download games. Both for handheld, and regular titles.
This cuts out the middle-men (the stores) and allows them to reduce the end-price to consumers.
This looks a lot like the iTunes model. But there is a twist.
On AppStore the revenue split is 70:30
On XBLA the revenue split is 30:70
C.
Copycats they really are.
I read the information in those two links. There's a lot of wiggle room there. But is seems difficult to prove it's a defect, according to Mr. H and another here.
What two links? I didn't post any
Oh yeah, and Nintendo does not have an app store for games!
You are a strange one.... Maybe you should have a look before talking
That's correct. Apple's machines are much more of a general purpose machine than the DS is. But people, it seems, are choosing to buy a lot of games.
But the example you gave me was a very small attachment rate for that game and for the number of devices sold.
Another thing is that "gamers", that is, people who primarily play RPG and FPS games seem to think that if those aren't the primary games selling on a platform, it;s not a game machine. We've all seen the studies that show that the vast majority of games are not those types. The sales numbers may seem as thought they are, but even 7 million of a title sold isn't very much when considering how many people play games, and a lot of games.
If you are referring to the COD4 example I have, that 7 million was in the first few months, not the total sales.
These things are hard to quantify. My daughter has so many games for each console, going back to before the Game Cube, that it's hard to tell what attachments rates she has.
Not really, take the number of games sold, divide by the number of consoles sold, you have the attachment rate.
You are a strange one.... Maybe you should have a look before talking
A built in App store which allows you to download games into the DS/ DSi wirelessly. Don't call people names. You are just good at picking quarrels with people. Tsk Tsk Tsk.
I do. I carry my iPod as a music player, iPhone as a phone and my DSi as a gaming device.
Where do you carry all those gadgets? I only carry what fits in my pockets.
Where do you carry all those gadgets? I only carry what fits in my pockets.
My bag for the DS. The rest are in my pockets. Left pocket for iPod Touch , right pocket for the 3GS.
A built in App store which allows you to download games into the DS/ DSi wirelessly. Don't call people names. You are just good at picking quarrels with people. Tsk Tsk Tsk.
Yes, on the DSi (not DS)
http://nintendodsi.com/meet-dsi-dsiware.jsp
Yes, on the DSi (not DS)
http://nintendodsi.com/meet-dsi-dsiware.jsp
Ok thanks. That will help me consider my reasoning again. Sorry if I offended you. Peace.
Nintendo is very profitable. They've done an amazing job this generation with the cheap Wii, and the DS over the past five years.
Agree.
Nintendo had a major drop in profit this quarter. not a slight slump. 66% is considered major by any standards. And Apple's computer sales weren't down by 8% year over year. The last quarter they were up 4%. They were down a few percent earlier, but then, the industry was down much further, and still is, even though Apple's sales were up.
Apple has not had a profit drop. In fact, this was their best non holiday quarter ever.
Mac revenue was down 8 %. I was comparing revenues of Nintendo and the Mac business which were both down. What was Mac profit? We don't know, Apple won't tell, but I would guess it should be down, too. Most Apple businesses were down last quarter by the way.
The iP/T have been out for two years. The DS line, for five years. For Apple to have sold that much product in two years is pretty serious.
Agree. My intent here was to add facts that were missing in the news story. Are you denying that the AI report failed to represent both sides?
Apple's iP/T sales will continue to increase. somehow you have the notion that sales will continue at 30 million units a year. They won't. Next year, Apple will sell considerably more, and considerably more the year after that. It looks as though Nintendo's DS sales will remain about the same.
Apple will surpass them in three years.
2012 is fine be me, we can agree on that. I saw you claiming earlier that the iPhone will surpass them by 2010. That's why I posted those figures. Apple is very unlikely to catch up 60 mn within 18 months.
You seem to forget that the App Store has only been open for one year. Look to yearly sales of games, not the total over time. How do you expect to compare the past five years totals with the totals of the first year?
I did not compare totals, that must be a misunderstanding. Apple is regularly announcing download figures and I merely calculate the mathematical difference between those milestones and the elapsed time and the resulting attach rate which is 4 to 5 apps per month. See below.
I also think it's intuitively logical that a user of a dedicated games devices will be willing to spend more on games on average than a user of a phone.
How many games sold for the DS the first year? Do you know?
You can look up all of Nintendo's financial history on www.nintendo.co.jp/ir/en. They're also making beautiful Annual Reports by the way.
DS software shipments between Nov 04 and Mar 05 were 10 mio units. Hardware shipments 5 mio units.
http://www.nintendo.co.jp/ir/pdf/2005/050526e.pdf, last page.
So 2 games or roughly $80 per user in the first 5 months. A lot higher than what an iPhone OS user spends on software per month.
Apple makes several times as much profit on an iPhone as the sales price for the DS. They likely make almost as much profit off the iPod Touch as the price of the DS. Apple isn't that interested in making money off the software. Nintendo MUST make money off the software.
If we're talking about 3rd party developers software revenue matters to both platforms. I think, like me, you have read dozens of complaints by developers that AppStore pricing is deteriorating. I seem to remember that John Carmack was one of them. He said something like "If $10 games are punished by the AppStore shoppers there can be no big budget games on the iPhone."
Nintendo sells machines to make money off software sales. Apple sells software to make money off hardware sales.
You have to understand this in order to understand the difference between the two companies.
The DS is likely priced lower than Nintendo would have to price it if it weren't for software licensing income.
Nintendo is a toy company, not a software company. They're selling hardware and software, with their hardware merely adequate for their software, so software surely dictates hardware for them. But that is not conclusive proof that their hardware is unprofitable or less profitable. I believe that both are essential to their business.
Both the Wii and the DS were launched years ago, and when they launched, Nintendo said they're selling at profit. Since then Nintendo will surely have been able to take advantage of optimizations and falling component prices, yet they have not (or rarely) dropped their prices.
The Wii is still selling for $249 like in 2006. Compare that to the GameCube which was launched at $249 in 2001 and sold for $99 by 2003--at profit, according to Nintendo. Compare it to Apple's massive yearly price drops for the iPod nano which did not hurt Apple's margins. I have no doubt that Nintendo could now sell the Wii at profit for $149 should the competition demand it, but they don't, so there's a large part of $100 in pure creamy profits right now.
Similarly, the DS was launched for $149 5 years ago and is now selling for $129, only 15 % lower than in 2004. In Europe it is still selling at the full price because it's so popular. Again, Nintendo's margin must have risen higher and higher every year.
Actually, downloads are speeding up. You can't look at the first two or three months, and extrapolate from that alone. Downloads went from nothing when the store opened to what seemed to be a large amount at the time, but is dwarfed by current use.
You will have to show something that proves what you are saying about growth.
Sure. Here's some page I just made in iWorks, based on the milestones Apple announced:
It shows that daily downloads have risen only slowly in the first half of 2009, slower than new devices were sold. I'm not saying there's a drop (which the second graph suggests) because that is probably normal seasonality than is also familiar from iTunes music sales, but the attachment rate is not rising anymore. It's about 4 to 5 downloads per month per device.
At the same time many developers are saying average prices are dropping. I don't know if it's true or not. Back in August 08 (long before $0.99 became dominant in the AppStore) Steve Jobs told the WSJ that the average price per download was $0.50 (including both free and paid downloads). I'm estimating it's $0.20 now, therefore claiming that the average user spends $1 per month on the AppStore. Maybe it's $2, who knows. One thing is a fact: DS customers are spending $10 per month per user for DS software.
And no one is saying that Apple is steamrolling over Nintendo except for your remake just now.
Seemed to be the tone in the article and this thread.
All I've said is that Apple is causing problems for them, and over time, sales of the iP/T will exceed that of the DS.
You've claimed more than that, including that 2010 forecast of yours.
But at some point, Nintendo will, I expect, discontinue the DS series as they have the others before it, and will replace it with a more advanced model. They will have to.
If that model offers more, then they may be able to stave off the loss of the number one position. Of course, it would have to be backwards compatible. We'll just have to see.
If you're counting gaming devices, Nintendo will remain number one, because the iPhone and iPod Touch are not gaming devices. Number one position by hardware of whatever kind, as long as it can play games, would be the 500 million devices of Series 40 line Nokia sold... Of course not meaningful.
If you call the AppStore the main threat to Nintendo, you have to compare the AppStore to Nintendo's software sales, in which Nintendo is clearly number one and will remain so for a long time. There's no way around it.
You are so very wrong. Apple is catching up. In two years they have sold half as many units of iP/T as Nintendo sold DS's in five years. That tells you nothing?
Um, Nintendo have also sold half as many units in 2 years as they've sold in 5 years. The point is, they're dedicated gaming devices with vastly better software $ attach rates.
And you are not looking into the markets in which both companies are selling.
Nintendo is selling into what has seemed to be a fairly mature handheld game machine market. Just two companies, them and Sony. Now there is a third.
The cycle is maturing, however Nintendo has doubled the market size between 2004 and 2008. It was a very dynamic market even before Apple entered. Nintendo, through their innovation, have killed dozens of direct competitors in the handhald market. The PSP is only the latest casualty.
Apple is now selling into a quickly growing market, the smartphone market. Two years ago when the iPhone came out, smartphones were 10% of the overall phone market of about a billion phones a year.
Apple captured 10% of the smartphone market which is what they announced they wanted to do (before the phone came out).
But smartphones are rapidly growing as a percentage of the phone market. Apple is selling into that rapidly growing market. Apple has about 11% of it.
So, even if Apple doesn't raise their percentage of that market, their sales will grow at a good rate. It's estimated that a few years from now, smartphones will be 75% of the phone market. Even if the overall market didn't grow, not very likely, then that would be a least 750 million smartphones, of which Apple would have 11% of, or about 82 million phone sales a year. As the Touch is selling at the rate of between one third to one half of that of the iPhone, there could be anywhere from 27 to 41 million of them selling each year as well. That would be a total of over 109 million units a year, to as much as 123 million units a year.
And that assumes that Apple's phone doesn't increase its marketshare, and the phone market doesn't grow.
Like you I'm very confident that Apple will be a leader in smartphones and sell more than 100 million devices per year. I'm very much looking forward to the time when smartphones, not PCs, will be best selling computing devices, because then the lethargy of the Microsoft Decades will finally be broken and we will see a lot more innovation and progress.
However, if you told me that Apple will reach those figures very soon, I would ask you: On what network? The infrastructure is just not there. And the plans are too expensive. And the phones are too expensive. If 75 % of the world wide market (including Latin, America, Africa, Asia...) should be smartphones, then a smartphone should cost no more than $100 on average, without contract. Because that is the ASP of a non-smart phone today. That time is one decade away, and it's idle to speculate how exactly Nintendo will look by then. Who knows, they might sell Android or Symbian based gaming handhelds with 4G chips by then, but it's really awfully far away.
By the way, when did Apple announce they want 10 % of the smartphone market? Source? I only recall 1 % of the phone market. I would also like to see a source for that "75 % will be smartphones" estimate, if you have one handy.
There is no way that Nintendo will ever sell over 100 million handheld units a year.
If $ attach rates for iPhone games don't improve, Nintendo doesn't have to. 30 million Nintendo handhelds per year could match the game sales of 300 million iPhones per year.
That's because Nintendo gets much of it's profits from software licensing.
Actually from their own games. Software licensing is probably #3 after hardware profits.
That's always more profitable than selling hardware. Why do you think that MS makes so much profit on their sales?
Because Windows and Office are monopolies? Windows Mobile is not profitable for example because it's selling for a lot less than Windows due to strong competition on the mobile phone market. It really depends on your business, there is no general rule if software or hardware are more profitable. Apple and Nintendo seem to agree that the total package can deliver the most value and therefore the highest profits.
Apple's operating margins are a bit lower than that.
Because of subscription accounting. If you look at the Non-GAAP net profit you know where the train goes with GAAP operating profits: above 20 %.
Apple doesn't actually drop prices for the latest products. The iTouch line goes for $229. $299, $399.
The iPod Touch 1G was $300 to $500. 2G is $230 to $400. Sure it's a price drop. And Tim Cook (from what I recall) said it was an aggressive move and would lower margins in an earnings call last fall.
iPhone margins are running about 58.5% though.
Could be. Speculation.