"Also, I do not imagine that iPhone will dominate the Nintendo DS market at once."
He is probably referring to his statement right before that: In 20 years' time a lot of things can and will happen, but he is confident that in the next few years retail sales will remain the largest venue for video games and therefore the iPhone is not an immediate threat. He is really talking about the time line here, when does Nintendo have to take which steps towards online?
This has been going on for several years. Before the iPhone everybody told Nintendo that they have to copy XBox Live now or will be doomed. It hasn't turned out that way. Online revenues are still a small share of the market. Same for music by the way, the forerunner of online sales: Apple may sell more music than Walmart, but retail still represents 80 % of the market and digital sales are growing at a slow rate.
That's exactly right. It's also why we can't directly compare the dollars spent on other platform games against Apple's as some here want to do..
Sure you can, you just have to factor the distribution margin in. Apple is taking 30 %, the normal retail chain plus licensor on a video game system takes 55 %, according to that Cecil guy. So that's 45 % of $39 = $17.55 for DS retail games vs. 70 % of $0.99 = $0.69 for many iPhone games. Factor 25.
If you need a publisher or not is a separate question. Apple's model is obviously better for self publishing, you could however also self publish on the PC market. For bigger projects a publisher can provide financing and marketing. If Cecil says that they only get 9 % of the retail price that seems awfully low, so I guess the publisher in that case already paid for a lot of things and may even have provided advance payments. Either way, big budget games will always rely on professional publishing and the video game publishers don't have the bad reputation of the music publishers. It's a healthy business that does not need fixing.
The AppStore's big advantage are low budget games. These are not viable in retail video games, where low budget is a title that "only" costs $100k to make. Normal handheld titles cost at least $500k to make. These are currently not viable as exclusives on iPhone OS. Low budget games will go a long way to establish Apple's platform in the video game market. However, it won't be enough to challenge Nintendo in their own market.
Controls are also an issue. Many popular genres are compromised on the iPhone by the lack of a directional pad and fire buttons. This is not the same situation as the iPhone keyboard vs. Blackberry keyboard, because keyboards are supposed to be big, and the BB mini keyboard is a compromise inferior to the iPhone's keyboard compromise so that we prefer the iPhone keyboard. A joypad however is always small, so the Nintendo DS's controls are the full-on real thing and not a compromise like the iPhone's virtual joypads.
What Apple could do to truely challenge Nintendo (and kill the PSP) is
1. Release an iPod Game and/or iPhone Game with d-pad and firebuttons as well as a bigger battery.
2. Get publishers to release big budget titles at $9.99 and never drop the price for one year. Keep doing this week after week, releasing dozens of these high-price titles over the course of a year in order to educate customers. This will of course require special deals and incentives for the involved publishers. But that's what it takes to build a video game business.
Apple probably won't bother to fight this fight and will remain in the low-price segment.
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?
As a general rule this is not true. It always depends on the implementation. Before the iPhone, Apple was involved in the development of 2 convergence devices - the ROKR and the games for iPod Classic/Nano. The ROKR flopped while the iPod games are an ongoing business but didn't exactly set the world on fire. In both cases there are good reasons why the match-up didn't work well, so companies really have to research and develop this for each product use.
Nintendo will of course never port to other platforms because they would lose a lot of their product margins. As I've suggested above: Should the market demand it, they could easily add Android and a mobile radio to their future devices. As long as Nintendo has their billion dollar super brands like Mario, Zelda, Pokemon, Brain Training, Nintendogs and on and on, people will always be lured to their platforms.
But the example you gave me was a very small attachment rate for that game and for the number of devices sold.
I give what I can find in a short time. Sometimes these things are hard to find, even though they may have been seen before.
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If you are referring to the COD4 example I have, that 7 million was in the first few months, not the total sales.
The numbers for the game I used was for a short time as well. I know that Monkeyball sold well over a million when I saw sales for it, but that was quite a while ago.
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Not really, take the number of games sold, divide by the number of consoles sold, you have the attachment rate.
So, I should empty all the cartons of games, and her storage unit, and put them in piles according to the machine they're bought for? I don't think so. That would take half the day, and then I'd have to put them back again in whatever order she had them in.
Do you have a teenage daughter? If you do, you'll understand.
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 only area in which Apple was down for the last quarter was in iPods. Everything else was up. They had the highest sales of any non holiday quarter in their history, and the highest profits. They sold the most computers they ever sold.
Apple splits out the sales and profits of various divisions, computers included. They had a mix of less expensive models, that's why it looks that way.
I don't understand where you're getting your numbers from.
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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?
The story was attempting to show a specific situation. They were correct in what they said. I don't know what else they should have said.
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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.
The iP/T might very well surpass the DS(i) yearly sales in 2010. That's what I was saying. I don't think they will pass total sales then. 2012 is a better bet.
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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.
I'm not going to get into those numbers, because they change when certain new games come out. The Nintendo numbers will move up or down much more than will the numbers for Apple. So it depends on when you're taking the readings.
I think its too early to make a good comparison anyway. It's only been a year since Apple has had the app store, and it took several months until most of the more complex games came out. By the spring we should have a better idea.
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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.
I've already seen them.
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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.
Nintendo's games cost four times as much as the equivalent iP/T game, so of course those people would be spending more.
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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."
There was an article about a Nintendo developer who said that game companies made the same from an iP/T game as they made from a DS game. I don't know the name of the article offhand The better games for the iP/T sell for $7.99 and $9.99. That hasn't changed.
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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.
I'm not saying it's UNprofitable. But they do make more money off the game licenses. Here's how much they make off each Wii sold, I wish they had the numbers for the DS. It also shows what they make of the licenses:
They might be making a few bucks more now, but not much.
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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.
I know. Nintendo went the safe route, and it paid off for them. They didn't spend much for R&D. They didn't spend much in manufacturing. The PS3 cost Sony $800 to make each unit when it first came out. now, that cost is expected to be around $280. But that was because of their very expensive cpu. The Cell cost a $billion to develop and get into production. Their other costs, when Blu-Ray players were still very expensive contributed a lot to that as well.
Nintendo went with off the shelf parts, and not expensive ones. Their manufacturing costs are not much lower than they were when they first started. I was a manufacturer. I know how this works.
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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.
It will take a lot more sales before the Wii's manufacturing costs come down much. I'll bet it costs them 75% of what it did at the beginning.
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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.
I'll bet they have a high return rate for those.
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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.
As I said, those numbers aren't very useful because when the store first came out, there was a pent up demand that caused the sales to explode. We need a good six months more to get a good idea.
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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.
The average program costs about $3. But the top games coming out have remained between $7.99 and $9.99. That hasn't changed, and the talk is that we may see major games for more.
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Seemed to be the tone in the article and this thread.
From a few perhaps. The tome is that Apple may exceed Nintendo in a few years, which is certainly correct.
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You've claimed more than that, including that 2010 forecast of yours.
That's because you misunderstood what I was saying.
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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.
I agree that as far as almost pure gaming devices go, Nintendo's will rule the roost. But that doesn't mean that in a few years that those almost pure gaming devices will continue to rule the handheld gaming roost.
And considering that Nintendo already sees the competition, that they won't continue to add features that will make it more like an iPod Touch than what it is now. Look at what they've already done to stave off the competition from Apple and others. They've added the ability to play music. You can download games and such. Now they've added a camera. What else will they add? The ability to make WiFi calls?
See where I'm going? In a few years, a DS(whatever) may not be recognizable to you. If that happens, we won't be talking about a nintendo handheld "game machine" anymore.
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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.
It's definitely a threat. But it will take a few more years before it has a chance to beat Nintendo there.
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.
Nintendo, in their report, estimated about 30 million DS(i) sales for their next financial year, the same as for this year.
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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.
That's what I'm saying. It's maturing. but they haven't killed the PSP by any means. It's possible that nintendo AND Apple together may kill it.
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.[/quote]
I'm happy we have some goals in common. It's thought that Apple could be selling more than 75 to 80 million phones a year in the next 5 years, not ten. And then there are the iPod Touches.
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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.
The first direct quote from Jobs, before the phone came out, was that Apple wanted 1% of the cell phone market. At the time, smartphones were 10% of that market. Later, someone else from Apple did say that it was 10% of the smartphone market they were after. This was after OS 2.0 came out. But I'd have to find that.
This is one from 2007, so it's not the latest (it also doesn't know about the recession). Keep in mind that today, smartphones are about 17% of the market. so figure the rates given there for another five years. Remember those numbers were given as an average. Some years will be higher, and some lower.
There are a lot of others. Some predict lower growth rates, some even higher. This recession has slowed everything down.
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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.
I doubt that. The iPhones are continuing to improve at a much greater rate than game machines do. OS v 3.0 and the Apple connector has allowed for items like these:
Actually from their own games. Software licensing is probably #3 after hardware profits.
I've posted an article about that to you. Do you have a link that can show us what you're saying?
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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.
It doesn't have to be a monopoly. Look at the financials of successful software companies. You'll find that most of them have gross margins at 75% or more. Their operating margins are large as well.
If a company is failing with software, then they may have losses. I don't know if Win Mobile is actually a loss for MS, though I doubt if they're doing well financially with it.
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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 %.
GAAP is a lot more than subscription financing. But, yes, they do better non-GAAP.
[quote]
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.
Well, normally, they only drop prices when newer technology allows them to. Margins didn't go down though. They went up because overall sales went up more than expected. Between lower unit selling costs, and commodity price drops, they did better.
He is probably referring to his statement right before that: In 20 years' time a lot of things can and will happen, but he is confident that in the next few years retail sales will remain the largest venue for video games and therefore the iPhone is not an immediate threat. He is really talking about the time line here, when does Nintendo have to take which steps towards online?
This has been going on for several years. Before the iPhone everybody told Nintendo that they have to copy XBox Live now or will be doomed. It hasn't turned out that way. Online revenues are still a small share of the market. Same for music by the way, the forerunner of online sales: Apple may sell more music than Walmart, but retail still represents 80 % of the market and digital sales are growing at a slow rate.
It didn't look as though he was talking about video or 20 years in reference to that statement.
At once refers to a very short time period. It looks as as though he was saying that it wouldn't happen shortly, but in a few years. I don't even think he would have said it at all if he meant 20 years.
In 20 years, its likely there won't even be standalone game machines. Not even computers as we know them today.
So, I should empty all the cartons of games, and her storage unit, and put them in piles according to the machine they're bought for? I don't think so. That would take half the day, and then I'd have to put them back again in whatever order she had them in.
Do you have a teenage daughter? If you do, you'll understand.
I use Delicious Library, I can go straight to it and see that we have for each platform, you should give it a go, it works well. And I believe it has an iPhone app as well.
But in saying that, some people have a lot of games, some have only a few, in the case of the Wii, it averages out to not many.
I use Delicious Library, I can go straight to it and see that we have for each platform, you should give it a go, it works well. And I believe it has an iPhone app as well.
But in saying that, some people have a lot of games, some have only a few, in the case of the Wii, it averages out to not many.
I don't know how many she has for each. And then she sells a few, and buys some more. The problems with catalog programs is that they're great if you start before you have a lot to do. But if you already have a lot, it's a pain. Not really worth it just to do it for myself. She always seems to know what she's got. Anyway, she's not here now, so the games machines are getting a long rest.
The only area in which Apple was down for the last quarter was in iPods. Everything else was up. They had the highest sales of any non holiday quarter in their history, and the highest profits. They sold the most computers they ever sold.
Apple splits out the sales and profits of various divisions, computers included. They had a mix of less expensive models, that's why it looks that way.
I don't understand where you're getting your numbers from.
I'm referring to revenue which is down for 2 legs of Apple's "3-legged stool", as Steve Jobs put it:
iPod revenues have been deteorating for quite some time, which of course has something to do with the iPhone, but the drop in Mac revenue is not funny. As I've said above, I'm not overinterpreting this. Neither should be Nintendo's last quarter, but let's not open that subject again since we've already found an agreement on that quarter.
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Originally Posted by melgross
The story was attempting to show a specific situation. They were correct in what they said. I don't know what else they should have said.
The headline says "Nintendo warns". "Warning" is a loaded term in investor communication. It refers to profit warning or revenue warning. Nintendo however did not change any of their forecasts for their business year. This false impression is repeated in the first paragraph with the word "anticipate" even though Nintendo did not say that they anticipate anything negative.
The fourth paragraph gives the impression that there is some kind of "preference for Apple's business model" in the market and that "developers [are lured in] with the promise of much wider exposure", while in fact, as I've shown, retail video games are still the vastly dominant form in terms of revenue (1:25 or more) and many developers are very unhappy with the low and deteriorating price points specifically on the AppStore and view them as unsustainable.
The fifth paragraph claims without any qualifications that Apple has the superior hardware even though a) Nintendo has a proper d-pad and fire buttons, b) Apple has inadequate battery life and c) none of the console wars over the last 3 decades were won by the most powerful hardware except maybe the SNES generation (if you only look at the big players of that generation).
These were the winners of the console generations: Atari 2600, NES, SNES, Playstation, PS2, Wii and in handhelds Game Boy, Game Boy Color, Game Boy Advance, DS. Each of them (except maybe the SNES, which was slightly more powerful than the Sega Genesis) had strong competitors with superior hardware with better graphics and sounds, but in the end software quality became the deciding factor. The Game Boy also won on battery life by the way.
The sixth and seventh paragraph gives 2 positive quotes for iPhone gaming as a viable business which were not balanced with some of the many statements that went the opposite way. John Carmack has both praised and critized the platform, but only the better half is reproduced by AI.
And of course, all the facts that I've listed--which are current sales, not predictions or rumors--were omitted. Thus AI did not paint a full picture of both good and bad, present and potential, but rather made Nintendo a target of Apple fanboi derision.
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Originally Posted by melgross
The iP/T might very well surpass the DS(i) yearly sales in 2010. That's what I was saying. I don't think they will pass total sales then. 2012 is a better bet.
Actually you said "it's expected by the end of 2010", so you were quoting somebody and made it sound like a consensus among analysts or market watchers, which of course it's not.
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Originally Posted by melgross
I'm not going to get into those numbers, because they change when certain new games come out. The Nintendo numbers will move up or down much more than will the numbers for Apple. So it depends on when you're taking the readings.
No offense, but facts beat rumours and predictions anytime. This is what my posting was all about.
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Originally Posted by melgross
I think its too early to make a good comparison anyway. It's only been a year since Apple has had the app store, and it took several months until most of the more complex games came out. By the spring we should have a better idea.
Yet you made the comparison now. Telling me to come back later now that I've proven my original claims is a good tactic, but my claims stand. AppStore downloads are not in explosive growth anymore.
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Originally Posted by melgross
Nintendo's games cost four times as much as the equivalent iP/T game, so of course those people would be spending more.
It's actually closer to 10 times now, which is bad for developers, unless Apple can make it up in volume.
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Originally Posted by melgross
There was an article about a Nintendo developer who said that game companies made the same from an iP/T game as they made from a DS game. I don't know the name of the article offhand The better games for the iP/T sell for $7.99 and $9.99. That hasn't changed.
Are you an iPhone game shopper, personally? At launch, I have paid $9.99 for Enigmo. That game is now selling for $0.99. All games I bought for $5-10 at that time now sell for much less: Trism, Spore, Crash Racing, Rolando, Topple etc. etc. Gameloft recently dropped all their prices dramatically. Most bigger games are now released around the $5 price points and dropping soon. $9.99 are a rare exception. According to 148apps.biz, of 8.000 for-pay games on the AppStore, only 100 are priced $5.99 to $8.99 and 100 more are priced $9.99 or more. The typical price point is $0.99 with $4.99 the cut-off line.
In the review section of every popular iPhone game you will find comments that state "I love the game and enjoyed it for hours, but it should be [lower price], so I'm giving it only 4 stars.", and this is even for $2.99 or $1.99 games. I find this attitude ridiculous, but this is how shoppers are conditioned now. Basically, as a shopper, if you see a game that you like and can be a little patient (say, for a few weeks) you won't buy it immediately but rather wait until the price drops to $0.99.
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Originally Posted by melgross
I'm not saying it's UNprofitable. But they do make more money off the game licenses. Here's how much they make off each Wii sold, I wish they had the numbers for the DS. It also shows what they make of the licenses:
They might be making a few bucks more now, but not much.
You want to believe that, ok. I don't. It's really just some analyst, why are you building most of your arguments on unreliable forecasts and estimates?
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Originally Posted by melgross
Nintendo went with off the shelf parts, and not expensive ones. Their manufacturing costs are not much lower than they were when they first started. I was a manufacturer. I know how this works.
The Wii has a custom CPU and a custom GPU, unlike the iPhone and iPod which have off-the-shelf parts. Apple is still working on their own chips, as we know. The Wii also has a custom controller which was an absolute first in all of consumer electronics.
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Originally Posted by melgross
It will take a lot more sales before the Wii's manufacturing costs come down much. I'll bet it costs them 75% of what it did at the beginning.
If that analyst says that the Wii is now sold with a 5 % margin and you think Nintendo have brought the cost down 25 % my calculator tells me that Nintendo would originally have sold the Wii at a 21 % loss. This in direct contradiction to their statements that it was profitable from the start.
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Originally Posted by melgross
I'll bet they have a high return rate for those.
Why would it be any different than Apple's? Nintendo is a household name, generations have grown up on the GameBoy. Their products are generally considered reliable. In terms of news items, Apple is of course the company that faces new claims of product defects every day, not Nintendo (seen the exploding iPod girl from Liverpool?). If Nintendo indeed had a higher return rate (which you cannot prove) that would only make their software sales more impressive in terms of attachment rate.
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Originally Posted by melgross
the talk is that we may see major games for more.
John Carmack is mildly disappointed by the sales of Doom. The term "major games" can of course be stretched. We will certainly see major franchises on some watered down and derivative form or other.
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Originally Posted by melgross
From a few perhaps. The tome is that Apple may exceed Nintendo in a few years, which is certainly correct.
The tone I heard from many was that Nintendo is a weak competitor, which is the impression that AI gave in the first place. The tone from you is that everything will multiply for Apple in the future and the present state of the AppStore does not count.
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Originally Posted by melgross
See where I'm going? In a few years, a DS(whatever) may not be recognizable to you. If that happens, we won't be talking about a nintendo handheld "game machine" anymore.
Exactly my words, except that "a few" would be 5 or more years.
I'm referring to revenue which is down for 2 legs of Apple's "3-legged stool", as Steve Jobs put it:
iPod revenues have been deteorating for quite some time, which of course has something to do with the iPhone, but the drop in Mac revenue is not funny. As I've said above, I'm not overinterpreting this. Neither should be Nintendo's last quarter, but let's not open that subject again since we've already found an agreement on that quarter.
The headline says "Nintendo warns". "Warning" is a loaded term in investor communication. It refers to profit warning or revenue warning. Nintendo however did not change any of their forecasts for their business year. This false impression is repeated in the first paragraph with the word "anticipate" even though Nintendo did not say that they anticipate anything negative.
The fourth paragraph gives the impression that there is some kind of "preference for Apple's business model" in the market and that "developers [are lured in] with the promise of much wider exposure", while in fact, as I've shown, retail video games are still the vastly dominant form in terms of revenue (1:25 or more) and many developers are very unhappy with the low and deteriorating price points specifically on the AppStore and few them as unsustainable.
The fifth paragraph claims without any qualifications that Apple has the superior hardware even though a) Nintendo has a proper d-pad and fire buttons, b) Apple has inadequate battery life and c) none of the console wars over the last 3 decades were won by the most powerful hardware except maybe the SNES generation (if you only look at the big players of that generation).
These were the winners of the console generations: Atari 2600, NES, SNES, Playstation, PS2, Wii and in handhelds Game Boy, Game Boy Color, Game Boy Advance, DS. Each of them (except maybe the SNES, which was slightly more powerful than the Sega Genesis) had strong competitors with superior hardware with better graphics and sounds, but in the end software quality became the deciding factor. The Game Boy also won on battery life by the way.
The sixth and seventh paragraph gives 2 positive quotes for iPhone gaming as a viable business which were not balanced with some of the many statements that went the opposite way. John Carmack has both praised and critized the platform, but only the better half is reproduced by AI.
And of course, all the facts that I've listed--which are current sales, not predictions or rumors--were omitted. Thus AI did not paint a full picture of both good and bad, present and potential, but rather made Nintendo a target of Apple fanboi derision.
Actually you said "it's expected by the end of 2010", so you were quoting somebody and made it sound like a consensus among analysts or market watchers, which of course it's not.
No offense, but facts beat rumours and predictions anytime. This is what my posting was all about.
Yet you made the comparison now. Telling me to come back later now that I've proven my original claims is a good tactic, but my claims stand. AppStore downloads are not in explosive growth anymore.
It's actually closer to 10 times now, which is good for developers, unless Apple can make it up in volume.
Are you an iPhone game shopper, personally? At launch, I have paid $9.99 for Enigmo. That game is now selling for $0.99. All games I bought for $5-10 at that time now sell for much less: Trism, Spore, Crash Racing, Rolando, Topple etc. etc. Gameloft recently dropped all their prices dramatically. Most bigger games are now released around the $5 price points and dropping soon. $9.99 are a rare exception. According to 148apps.biz, of 8.000 for-pay games on the AppStore, only 100 are priced $5.99 to $8.99 and 100 more are priced $9.99 or more. The typical price point is $0.99 with $4.99 the cut-off line.
In the review section of every popular iPhone game you will find comments that state "I love the game and enjoyed it for hours, but it should be [lower price], so I'm giving it only 4 stars.", and this is even for $2.99 or $1.99 games. I find this attitude ridiculous, but this is how shoppers are conditioned now. Basically, as a shopper, if you see a game that you like and can be a little patient (say, for a few weeks) you won't buy it immediately but rather wait until the price drops to $0.99.
You want to believe that, ok. I don't. It's really just some analyst, why are you building most of your arguments on unreliable forecasts and estimates?
The Wii has a custom CPU and a custom GPU, unlike the iPhone and iPod which have off-the-shelf parts. Apple is still working on their own chips, as we know. The Wii also has a custom controller which was an absolute first in all of consumer electronics.
If that analyst says that the Wii is now sold with a 5 % margin and you think Nintendo have brought the cost down 25 % my calculator tells me that Nintendo would originally have sold the Wii at a 21 % loss. This in direct contradiction to their statements that it was profitable from the start.
Why would it be any different than Apple's? Nintendo is a household name, generations have grown up on the GameBoy. Their products are generally considered reliable. In terms of news items, Apple is of course the company that faces new claims of product defects every day, not Nintendo (seen the exploding iPod girl from Liverpool?). If Nintendo indeed had a higher return rate (which you cannot prove) that would only make their software sales more impressive in terms of attachment rate.
John Carmack is mildly disappointed by the sales of Doom. The term "major games" can of course be stretched. We will certainly see major franchises on some watered down and derivative form or other.
The tone I heard from many was that Nintendo is a weak competitor, which is the impression that AI gave in the first place. The tone from you is that everything will multiply for Apple in the future and the present state of the AppStore does not count.
Exactly my words, except that "a few" would be 5 or more years.
That's what I'm saying. It's maturing. but they haven't killed the PSP by any means. It's possible that nintendo AND Apple together may kill it.
Cycle is maturing, not the market. There have been many cycles before.
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Originally Posted by melgross
There are a lot of others. Some predict lower growth rates, some even higher. This recession has slowed everything down.
I was curious about the 75 % prediction because currently more than half of phone sales are in developing countries. To reach 75 % worldwide smartphones would not only have to sweep the richer countries but also take a significant share in the developing countries. Hence I suggested that $100, not $500 as today, would have to become the average price point for smartphones before that kind of market size can arrive.
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Originally Posted by melgross
I doubt that. The iPhones are continuing to improve at a much greater rate than game machines do.
True, looks like Apple is going for a 2-year-cycle in terms of CPU/GPU upgrades.
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Originally Posted by melgross
OS v 3.0 and the Apple connector has allowed for items like these:
Shortly we'll have what some gamers complain about, physical controllers.
Your wording seems to implie that you don't sympathize with those customers' desires? We will see if these products reach the market. The Gamebone looks weird and is just a render while the icontrolpad is already in prototype stage, but was developed under Jailbreak conditions, not official OS 3.0, and the weblog has seen no update since January. They will need to find adoption from customers and developers at the same time, which is a big hurdle, epecially if there's no common standard. An approach by Apple or at least by a big firm like Logitech oder Belkin would be more successful, but if one those two products comes to market it might help, too. The battery problem still persits.
I'm referring to revenue which is down for 2 legs of Apple's "3-legged stool", as Steve Jobs put it:
iPod revenues have been deteorating for quite some time, which of course has something to do with the iPhone, but the drop in Mac revenue is not funny. As I've said above, I'm not overinterpreting this. Neither should be Nintendo's last quarter, but let's not open that subject again since we've already found an agreement on that quarter.
As I mentioned, Apple's prices have been lower, which is why revenue, during this serious recession is just a little bit lower. You also said that computer sales were down, which they were not, they were up. No one considers Apple revenues to be a problem. In fact, they are lauding that the drop was so small in this difficult time. Overall, Apple sales and profits are up, unlike Nintendo's which are seriously down overall.
And as you say, it's Apple higher priced products that are accounting for most, if not all of the iPod drop, in both units and revenue, so it really doesn't matter. In fact, that's considered to be a bright spot for Apple, not the poor one that you are trying to make it out to be. The iTouch sales are 130% higher than last year, that an awful lot. Apple would no doubt be very happy if people stop buying cheaper iPods in droves, and instead migrated to the iP/T platform, as they seem to be doing.
Get out of a business that seems to be about saturated, and into one that has a lot of room to grow, with more profits for Apple at the same time.
With industry computer sales around the world experiencing a drop in sales, the fact that Apple has clawed themselves to two quarters of increased sales, though small, is considered in the industry to be very good indeed. Just go and read any article about it. Apple is still gaining marketshare, not losing it, except for the netbook sales, which Apple doesn't care for, and doesn't affect their business.
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The headline says "Nintendo warns". "Warning" is a loaded term in investor communication. It refers to profit warning or revenue warning. Nintendo however did not change any of their forecasts for their business year. This false impression is repeated in the first paragraph with the word "anticipate" even though Nintendo did not say that they anticipate anything negative.
I wasn't there, so I don't know if Nintendo was giving a warning, a caution, or an acknowledgement. In the end it means pretty much the same thing. Companies, by law almost everywhere, must give notice in their filings of whatever may have a negative affect on their business. Apple does this every quarter.
It's normally not a big deal. But when the filings are poured over, anything new is looked for. When something new is found, they all pile upon that. As Nintendo mentioned this, apparently, in their conference, it was publicly noted. Why did they mention Apple? How much of a threat do they think it is, etc. Big news. Apple is a new competitor for them. That's a big story. Whenever an industry, which is lazy in its ways, because each company pretty much knows what the others will be doing, is shaken up by a newcomer, that makes the headlines. Often, the newcomer fails to gain long term traction. But if they have a lot of money behind them, and they have a good rep, they must be taken seriously.
When they have products that don't depend on the industries' main business, but will compete there, that's a very big problem. That's what made MS so dangerous over the years, though they've been less successful as of late against Apple.
'quote]
The fourth paragraph gives the impression that there is some kind of "preference for Apple's business model" in the market and that "developers [are lured in] with the promise of much wider exposure", while in fact, as I've shown, retail video games are still the vastly dominant form in terms of revenue (1:25 or more) and many developers are very unhappy with the low and deteriorating price points specifically on the AppStore and view them as unsustainable.[/quote]
Ok, now let's look at what's really happening here. First of all, most of what you read is really about the iPhone against other phone manufacturers, not against Nintendo. The Apple model is very compelling indeed. Far more so than what's come before. All other phone manufacturers are trying to catch up in phones and application stores. Even a big network in the name of Verizon is trying to cash in on that idea.
The phone manufacturers know that apps now sell phones as much as the phones themselves do.
What's different about Apple's phones (and the iPod Touch) is that all the models so far, can use most all of the apps. There are some that require new hardware, such as 3G, GPS, compass, and such, but even then, a lot of that software works on the older models but not with all the features.
This gives Apple's model a big leg up over the other manufacturers, who have phones out concurrently with different versions of the same OS which can't be upgraded on those phones, different OS's, and totally different phones. Totally different. So most of their phones can't use most of the apps they may have They've presented no continuum of ideas for their lines, coming out willy nilly with new models, often having little relationship with earlier models. They are just now beginning to understand how that has hurt them.
None of them, no matter what games they may have, can challenge Nintendo, or Sony. But Apple can.
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The fifth paragraph claims without any qualifications that Apple has the superior hardware even though a) Nintendo has a proper d-pad and fire buttons, b) Apple has inadequate battery life and c) none of the console wars over the last 3 decades were won by the most powerful hardware except maybe the SNES generation (if you only look at the big players of that generation).
It's interesting, but as with virtual keyboard over physical keyboards on phones, it seems that people who are used to the "real" buttons often favor them over the virtual ones, at least in the beginning. But people who have never used a smartphone before, and so haven't used those tiny QWERTY bubble keyboards seem to prefer the virtual ones from the first.
As the population isn't static, and people age through certain points of their lives, we are getting people using an iPhone for the first time, just as there are those using a DS for the first time. As more people experience an iPhone at an earlier age, they will become used to controls that are different.
Remember that it was said in almost all the game mags and sites (at least, all the ones I read) that the Nintendo Wii controllers would be a failure. You remember that, right? But those people were wrong. The controllers became popular, because the games used them well.
The controls for the iPhone are different s well. At first, my daughter, a very big gamer, didn't like them, but after she bought more games, she found that they worked pretty well. Now that she's got a 3GS, she tells me that they work much better, because they are more responsive. There are still some games she would like more conventional controls for, but as you saw earlier, from the links I posted, if you read them, companies are coming out with controllers which will fix that problem as well.
As for quality, the iP/T are pretty high quality, and both the graphics and cpu are very much superior to what is in the much cheaper DS. That's to be expected, and shouldn't be surprising. It's also well known.
[/quote]
These were the winners of the console generations: Atari 2600, NES, SNES, Playstation, PS2, Wii and in handhelds Game Boy, Game Boy Color, Game Boy Advance, DS. Each of them (except maybe the SNES, which was slightly more powerful than the Sega Genesis) had strong competitors with superior hardware with better graphics and sounds, but in the end software quality became the deciding factor. The Game Boy also won on battery life by the way.[/quote]
The Gameboy's and later, are not consoles. You also forgot, or don't know about the Atari Lynx, which I bought, and was far superior to anything in its day. Actually pretty good even today. But the Tramiels, who owned Atari, screwed the company up, so it all disappeared.
Several of those companies disappeared. Atari's 2600 was the first real console, and had no competition for a while.
You also forgot the Coleco. That was a big winner as well. Very important console. amazing graphics for the time, and killed the 2600. You also don't mention the Intellivision, which I also have, and was a very important unit, and had very large sales. It was also considered to have some of the best gameplay of all the machines.
Again, though, you're forgetting that while Nintendo DEPENDS of game sales, Apple does not. Even if Apple removed all games for the app store, the devices would still be a success, though not as big perhaps.
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The sixth and seventh paragraph gives 2 positive quotes for iPhone gaming as a viable business which were not balanced with some of the many statements that went the opposite way. John Carmack has both praised and critized the platform, but only the better half is reproduced by AI.
A lot of what Carmak criticized disappeared with the appearance of the 3GS. He said that himself. Most of his problems were with hardware performance vs the OS. At first he was saying that Apple should strip the OS of whatever slowed the hardware down for gaming, which was ridiculous. But with the release of the 3GS he said the problems were resolved. Perhaps thats why AI didn't mention the negatives that Carmack himself said no longer applied.
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And of course, all the facts that I've listed--which are current sales, not predictions or rumors--were omitted. Thus AI did not paint a full picture of both good and bad, present and potential, but rather made Nintendo a target of Apple fanboi derision.
I'm not so sure that all of those "facts" are facts, but rather opinions of what the "facts" mean. Other numerical "facts" you've supplied are not what you seem to think, as those for Apple financials show. Sometimes, the numbers don't mean what you want them to. How about the fact that Wii sales dropped about in half. What about DS sales? Are these problems for Nintendo other than from the recession, or are they fundamental problems? I've not commented on which they are, but you might want to.
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Actually you said "it's expected by the end of 2010", so you were quoting somebody and made it sound like a consensus among analysts or market watchers, which of course it's not.
You would have to quote the entire part where I said that, because I don't know to what you are referring. I never said what you are saying I did, in they way you are saying I did, and it would be good of you to drop it, as I've told you what I meant twice now, ok?
[quote]
No offense, but facts beat rumours and predictions anytime. This is what my posting was all about./quote]
Your posts are all about a frenzied defense of Nintendo. Starting with a denial of what Nintendo said, and moving from there.
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Yet you made the comparison now. Telling me to come back later now that I've proven my original claims is a good tactic, but my claims stand. AppStore downloads are not in explosive growth anymore.
I had to to give you some response that made more sense than yours. Even if the stores' growth was 10% a month, most people would consider that to be "explosive". Even 5% would be a thrill for most companies, including Nintendo.
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It's actually closer to 10 times now, which is bad for developers, unless Apple can make it up in volume.
No, that's not true. You refuse to separate the major games from the ones done by one individual on their own time, or a very small company, that is very happy with small sales. Mot of these small companies would not be able to get a game on Nintendo's platform at all. They make good money where they wouldn't make any. Apple's platform can support a vastly larger population of developers than can Nintendo's, because the cost to produce most games for Apple are far smaller than for Nintendo. And the production costs are vastly less as well. Apple only takes a 30% cut, and does all the rest of the work. A developer for Nintendo only gets a few percent of the price.
Therefor, we can have many more "little" games, which is what most people prefer anyway, that just sell in the hundreds of thousands, or even less, and have the developer make a good profit. but these games on the Nintendo would never even make it through the screening process, because they are so expensive to do that Nintendo can't allow a game that might sell 10,000 copies. If it happens, it was a mistake.
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Are you an iPhone game shopper, personally? At launch, I have paid $9.99 for Enigmo. That game is now selling for $0.99. All games I bought for $5-10 at that time now sell for much less: Trism, Spore, Crash Racing, Rolando, Topple etc. etc. Gameloft recently dropped all their prices dramatically. Most bigger games are now released around the $5 price points and dropping soon. $9.99 are a rare exception. According to 148apps.biz, of 8.000 for-pay games on the AppStore, only 100 are priced $5.99 to $8.99 and 100 more are priced $9.99 or more. The typical price point is $0.99 with $4.99 the cut-off line.
I've bought a dozen games or so. I'm not nearly as big a game player as I was when I was younger. I have much more interesting things to do such as arguing with you ABOUT games.
But your choice of Enigmo, which I bought when it first came out, is a good example of why Apple's way is so good. Enigmo sold a lot of copies at the higher price. For a long time it was one of the most popular games. The fact that distribution costs are almost nothing means that after a game loses popularity, but is still selling somewhat, a developer can continue to drop the prices to encourage sales. There is no cost to them, or to Apple. Everything after a certain number of copies have been sold is pure profit.
Nintendo can't do that because of all the royalty costs along the line, as well as the fixed costs for the cartrige and packaging, as well as the distribution costs, and the store mark-up. (Even their downloadable games are stuck with much of that. If the price of the game falls too low, it will be removed from the shelves because shelf space is expensive. The game is then gone, except for the occasional used copy which give only the store a benefit.
Apple's way insures that the shelf space is almost infinite. It costs nothing. Both Apple and the devekoper can make money from that game as long as people are willing to spend 99 cents for it.
A wonderful situalion for all concerned. And when sales drop to the point that the developer feels that their newer products can use some advertising, they can change it to a free game. That's just great! How many of Nintendo's older games are seen in stores for 99 cents, or for free?.
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In the review section of every popular iPhone game you will find comments that state "I love the game and enjoyed it for hours, but it should be [lower price], so I'm giving it only 4 stars.", and this is even for $2.99 or $1.99 games. I find this attitude ridiculous, but this is how shoppers are conditioned now. Basically, as a shopper, if you see a game that you like and can be a little patient (say, for a few weeks) you won't buy it immediately but rather wait until the price drops to $0.99.
There are always some who will think that. There are plenty of people who won't buy a Nintendo product, or one from MS, or Sony, because the games cost way too much.
But as I said before, the large fixed costs require heavy prices. That's not a good thing. It costs far less to do a game for the iPhone, and so the price should be far less. They can still make a good profit. Even developers who sell apps for 99 cents have said they make good money.
If a game costs just a few thousand to do if one person is doing it, then how much should it cost? If you sell just 50,000 copies at 99 cents, that's almost $35,000 profit. If that game just took a month to do, that's pretty damn good, and is why so many are writing apps for the system.
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You want to believe that, ok. I don't. It's really just some analyst, why are you building most of your arguments on unreliable forecasts and estimates?
Because they do usually get close to the truth. You are acting as your own analyst. Why should I believe anything you say?
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The Wii has a custom CPU and a custom GPU, unlike the iPhone and iPod which have off-the-shelf parts. Apple is still working on their own chips, as we know. The Wii also has a custom controller which was an absolute first in all of consumer electronics.
The Wii is off the shelf. It's a low end cpu and gpu. Any mods were very simple. This has been written about endlessly when it first came out. It's not much of an advance over the Gamecube.
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If that analyst says that the Wii is now sold with a 5 % margin and you think Nintendo have brought the cost down 25 % my calculator tells me that Nintendo would originally have sold the Wii at a 21 % loss. This in direct contradiction to their statements that it was profitable from the start.
I did say that the cost to produce could have come down by 25%, but that was just speculation on an extreme, as I see it. I really don't think their costs have dropped that much. But marketing costs have risen if anything because of the recession, and sales have declined. That all effects the margins.
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Why would it be any different than Apple's? Nintendo is a household name, generations have grown up on the GameBoy. Their products are generally considered reliable. In terms of news items, Apple is of course the company that faces new claims of product defects every day, not Nintendo (seen the exploding iPod girl from Liverpool?). If Nintendo indeed had a higher return rate (which you cannot prove) that would only make their software sales more impressive in terms of attachment rate.
Because most people I know have had theirs break? IT's a cheaper product so people don't care as much.
Reports of Apple problems are rare. This "exploding" unit is extremely rare. I think it has happened to one or two others. and people threw them first. It's also a battery problem. The iP/T has been very reliable.
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John Carmack is mildly disappointed by the sales of Doom. The term "major games" can of course be stretched. We will certainly see major franchises on some watered down and derivative form or other.
Well, its an older game. I don't know how sales of old games are going to do now. We would need a contemporary game from him to see how it does. But sales were pretty good according to him, but he hoped they would be even higher.
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The tone I heard from many was that Nintendo is a weak competitor, which is the impression that AI gave in the first place. The tone from you is that everything will multiply for Apple in the future and the present state of the AppStore does not count.
Don't make the mistake of making me responsible for what everyone else says. Everyone is entitled to their own opinion, even if we don't agree with it.
Everything will multiply in the future. I'm surprised you don't see that, even though you acknowledge that the sales of the iP/T will be several times as much as they are now on a yearly sales basis. If the store just barely keeps up, then it will have a multiple of the sales it has now. Thats just third grade math.
Apple has sold between 45 and 50 million of the devices by now, maybe more. Perhaps 10%are out of commission, but the rest seem to get recycled. I don't know how many of the 100 million DS's are still working, and I won't guess.
But in a few years, Apple will have 200 million working. That's a lot of units, and a lot of software sales.
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Exactly my words, except that "a few" would be 5 or more years.
Ok, let's say 5 years. Let's even say six. Or maybe four. Whatever. The point is that it's likely to happen. If not, Nintendo is in trouble.
most of the analysis being done is from what we know about Nintendo. They are a game company. Can they transition to a company that moves partly away from games with more sophisticated devices and software? They would have to do a major reworking of their DSOS. They can't just add API's if the OS isn't intended to do much of this.
Personally, I hope they can. I like Nintendo. I want to see them thrive. At the very least, Apple needs successful profitable competitors.
I really like Apple, for their products, and their stock, but I don't want to see them alone out there.
Oh, and please, let's try to keep these posts shorter. It took forever to reply to this one. Thanks.
Cycle is maturing, not the market. There have been many cycles before.
Like the market for music players, the handheld game market is maturing as well.
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I was curious about the 75 % prediction because currently more than half of phone sales are in developing countries. To reach 75 % worldwide smartphones would not only have to sweep the richer countries but also take a significant share in the developing countries. Hence I suggested that $100, not $500 as today, would have to become the average price point for smartphones before that kind of market size can arrive.
Smartphone prices are coming down. That leads to wider adoption, even in poorer markets. The iPhone as sold for outrageous prices in the poorest markets around the world, even though most of those phones were brought in by means of the "grey" market.
Apple now does have a phone for $99. Yes, you need a contract. but plenty of people get contracts.
If Apple does this every year, that is drop the price of last years model to $99 while coming out with newer ones, that will prove popular. And in many countries where people are poor, an expensive cell phone is their item of prestige. They can't afford a car, or a big Tv, or apartment, but they are willing to save up for a phone.
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True, looks like Apple is going for a 2-year-cycle in terms of CPU/GPU upgrades.
I'm pretty sure we'll see the fruit of Apple's purchase of PA next year. The talk is about the dual core cpu with whatever features Apple will add into it. Also a much faster GPU with Open GL 3.
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Your wording seems to implie that you don't sympathize with those customers' desires? We will see if these products reach the market. The Gamebone looks weird and is just a render while the icontrolpad is already in prototype stage, but was developed under Jailbreak conditions, not official OS 3.0, and the weblog has seen no update since January. They will need to find adoption from customers and developers at the same time, which is a big hurdle, epecially if there's no common standard. An approach by Apple or at least by a big firm like Logitech oder Belkin would be more successful, but if one those two products comes to market it might help, too. The battery problem still persits.
I do sympathize with them. I just don't know what the percentage is.
I do think, as I've said, that newcomers to handheld gaming might not be so opposed to the controls the devices have now.
Some heavy gamers complain about the lack of physical interfaces. how many are they, really?
I say let's wrap it up for now since everything has been said, and we're partly going off topic, partly accusing each other of who has or has not said what where in this sprawling conversation, something that depresses and scares me, frankly. The video game market has become interesting again, that's for sure. Greatings from sunny Berlin. Have a nice weekend!
I say let's wrap it up for now since everything has been said, and we're partly going off topic, partly accusing each other of who has or has not said what where in this sprawling conversation, something that depresses and scares me, frankly. The video game market has become interesting again, that's for sure. Greatings from sunny Berlin. Have a nice weekend!
Comments
It's interesting.
His next to last statement is very revealing.
"Also, I do not imagine that iPhone will dominate the Nintendo DS market at once."
He is probably referring to his statement right before that: In 20 years' time a lot of things can and will happen, but he is confident that in the next few years retail sales will remain the largest venue for video games and therefore the iPhone is not an immediate threat. He is really talking about the time line here, when does Nintendo have to take which steps towards online?
This has been going on for several years. Before the iPhone everybody told Nintendo that they have to copy XBox Live now or will be doomed. It hasn't turned out that way. Online revenues are still a small share of the market. Same for music by the way, the forerunner of online sales: Apple may sell more music than Walmart, but retail still represents 80 % of the market and digital sales are growing at a slow rate.
My bag for the DS. The rest are in my pockets. Left pocket for iPod Touch , right pocket for the 3GS.
I'm curious, why do you carry an iPod with an iPhone? Is your iPhone mostly filled with apps with no room for music?
That's exactly right. It's also why we can't directly compare the dollars spent on other platform games against Apple's as some here want to do..
Sure you can, you just have to factor the distribution margin in. Apple is taking 30 %, the normal retail chain plus licensor on a video game system takes 55 %, according to that Cecil guy. So that's 45 % of $39 = $17.55 for DS retail games vs. 70 % of $0.99 = $0.69 for many iPhone games. Factor 25.
If you need a publisher or not is a separate question. Apple's model is obviously better for self publishing, you could however also self publish on the PC market. For bigger projects a publisher can provide financing and marketing. If Cecil says that they only get 9 % of the retail price that seems awfully low, so I guess the publisher in that case already paid for a lot of things and may even have provided advance payments. Either way, big budget games will always rely on professional publishing and the video game publishers don't have the bad reputation of the music publishers. It's a healthy business that does not need fixing.
The AppStore's big advantage are low budget games. These are not viable in retail video games, where low budget is a title that "only" costs $100k to make. Normal handheld titles cost at least $500k to make. These are currently not viable as exclusives on iPhone OS. Low budget games will go a long way to establish Apple's platform in the video game market. However, it won't be enough to challenge Nintendo in their own market.
Controls are also an issue. Many popular genres are compromised on the iPhone by the lack of a directional pad and fire buttons. This is not the same situation as the iPhone keyboard vs. Blackberry keyboard, because keyboards are supposed to be big, and the BB mini keyboard is a compromise inferior to the iPhone's keyboard compromise so that we prefer the iPhone keyboard. A joypad however is always small, so the Nintendo DS's controls are the full-on real thing and not a compromise like the iPhone's virtual joypads.
What Apple could do to truely challenge Nintendo (and kill the PSP) is
1. Release an iPod Game and/or iPhone Game with d-pad and firebuttons as well as a bigger battery.
2. Get publishers to release big budget titles at $9.99 and never drop the price for one year. Keep doing this week after week, releasing dozens of these high-price titles over the course of a year in order to educate customers. This will of course require special deals and incentives for the involved publishers. But that's what it takes to build a video game business.
Apple probably won't bother to fight this fight and will remain in the low-price segment.
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?
As a general rule this is not true. It always depends on the implementation. Before the iPhone, Apple was involved in the development of 2 convergence devices - the ROKR and the games for iPod Classic/Nano. The ROKR flopped while the iPod games are an ongoing business but didn't exactly set the world on fire. In both cases there are good reasons why the match-up didn't work well, so companies really have to research and develop this for each product use.
Nintendo will of course never port to other platforms because they would lose a lot of their product margins. As I've suggested above: Should the market demand it, they could easily add Android and a mobile radio to their future devices. As long as Nintendo has their billion dollar super brands like Mario, Zelda, Pokemon, Brain Training, Nintendogs and on and on, people will always be lured to their platforms.
What two links? I didn't post any
You know, things are getting a bit confusing. There are two threads here with the same conversation about warrantees. Odd, right? At the same time.
These are the two links I was referring to, when I was thinking about them, even though they're from the other thread. Sorry about that.
http://www.berr.gov.uk/whatwedo/cons...page38311.html
http://www.bitterwallet.com/exercise...r-rights/12447
But the example you gave me was a very small attachment rate for that game and for the number of devices sold.
I give what I can find in a short time. Sometimes these things are hard to find, even though they may have been seen before.
If you are referring to the COD4 example I have, that 7 million was in the first few months, not the total sales.
The numbers for the game I used was for a short time as well. I know that Monkeyball sold well over a million when I saw sales for it, but that was quite a while ago.
Not really, take the number of games sold, divide by the number of consoles sold, you have the attachment rate.
So, I should empty all the cartons of games, and her storage unit, and put them in piles according to the machine they're bought for? I don't think so.
Do you have a teenage daughter? If you do, you'll understand.
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 only area in which Apple was down for the last quarter was in iPods. Everything else was up. They had the highest sales of any non holiday quarter in their history, and the highest profits. They sold the most computers they ever sold.
Apple splits out the sales and profits of various divisions, computers included. They had a mix of less expensive models, that's why it looks that way.
I don't understand where you're getting your numbers from.
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?
The story was attempting to show a specific situation. They were correct in what they said. I don't know what else they should have said.
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.
The iP/T might very well surpass the DS(i) yearly sales in 2010. That's what I was saying. I don't think they will pass total sales then. 2012 is a better bet.
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.
I'm not going to get into those numbers, because they change when certain new games come out. The Nintendo numbers will move up or down much more than will the numbers for Apple. So it depends on when you're taking the readings.
I think its too early to make a good comparison anyway. It's only been a year since Apple has had the app store, and it took several months until most of the more complex games came out. By the spring we should have a better idea.
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.
I've already seen them.
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.
Nintendo's games cost four times as much as the equivalent iP/T game, so of course those people would be spending more.
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."
There was an article about a Nintendo developer who said that game companies made the same from an iP/T game as they made from a DS game. I don't know the name of the article offhand The better games for the iP/T sell for $7.99 and $9.99. That hasn't changed.
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.
I'm not saying it's UNprofitable. But they do make more money off the game licenses. Here's how much they make off each Wii sold, I wish they had the numbers for the DS. It also shows what they make of the licenses:
http://www.mcvuk.com/news/32535/Nint...Every-Wii-Sold
They might be making a few bucks more now, but not much.
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.
I know. Nintendo went the safe route, and it paid off for them. They didn't spend much for R&D. They didn't spend much in manufacturing. The PS3 cost Sony $800 to make each unit when it first came out. now, that cost is expected to be around $280. But that was because of their very expensive cpu. The Cell cost a $billion to develop and get into production. Their other costs, when Blu-Ray players were still very expensive contributed a lot to that as well.
Nintendo went with off the shelf parts, and not expensive ones. Their manufacturing costs are not much lower than they were when they first started. I was a manufacturer. I know how this works.
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.
It will take a lot more sales before the Wii's manufacturing costs come down much. I'll bet it costs them 75% of what it did at the beginning.
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.
I'll bet they have a high return rate for those.
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.
As I said, those numbers aren't very useful because when the store first came out, there was a pent up demand that caused the sales to explode. We need a good six months more to get a good idea.
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.
The average program costs about $3. But the top games coming out have remained between $7.99 and $9.99. That hasn't changed, and the talk is that we may see major games for more.
Seemed to be the tone in the article and this thread.
From a few perhaps. The tome is that Apple may exceed Nintendo in a few years, which is certainly correct.
You've claimed more than that, including that 2010 forecast of yours.
That's because you misunderstood what I was saying.
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.
I agree that as far as almost pure gaming devices go, Nintendo's will rule the roost. But that doesn't mean that in a few years that those almost pure gaming devices will continue to rule the handheld gaming roost.
And considering that Nintendo already sees the competition, that they won't continue to add features that will make it more like an iPod Touch than what it is now. Look at what they've already done to stave off the competition from Apple and others. They've added the ability to play music. You can download games and such. Now they've added a camera. What else will they add? The ability to make WiFi calls?
See where I'm going? In a few years, a DS(whatever) may not be recognizable to you. If that happens, we won't be talking about a nintendo handheld "game machine" anymore.
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.
It's definitely a threat. But it will take a few more years before it has a chance to beat Nintendo there.
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.
Nintendo, in their report, estimated about 30 million DS(i) sales for their next financial year, the same as for this year.
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.
That's what I'm saying. It's maturing. but they haven't killed the PSP by any means. It's possible that nintendo AND Apple together may kill it.
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.[/quote]
I'm happy we have some goals in common. It's thought that Apple could be selling more than 75 to 80 million phones a year in the next 5 years, not ten. And then there are the iPod Touches.
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.
The first direct quote from Jobs, before the phone came out, was that Apple wanted 1% of the cell phone market. At the time, smartphones were 10% of that market. Later, someone else from Apple did say that it was 10% of the smartphone market they were after. This was after OS 2.0 came out. But I'd have to find that.
This is one from 2007, so it's not the latest (it also doesn't know about the recession). Keep in mind that today, smartphones are about 17% of the market. so figure the rates given there for another five years. Remember those numbers were given as an average. Some years will be higher, and some lower.
http://www.instat.com/press.asp?ID=2148&sku=IN0703823WH
Look at these numbers, they're even more impressive:
http://stephenslighthouse.sirsidynix...ne_grow_1.html
http://www.fiercewireless.com/story/...id=OTC-RSS-FW0
There are a lot of others. Some predict lower growth rates, some even higher. This recession has slowed everything down.
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.
I doubt that. The iPhones are continuing to improve at a much greater rate than game machines do. OS v 3.0 and the Apple connector has allowed for items like these:
http://www.22moo.com.au/gamebonepro.html
http://www.icontrolpad.com/
Shortly we'll have what some gamers complain about, physical controllers.
I think the handheld gaming industry will be a very interesting area a few years from now.
I don't want to see any of the companies go under. Too many have already. It makes the world a much less interesting place.
Actually from their own games. Software licensing is probably #3 after hardware profits.
I've posted an article about that to you. Do you have a link that can show us what you're saying?
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.
It doesn't have to be a monopoly. Look at the financials of successful software companies. You'll find that most of them have gross margins at 75% or more. Their operating margins are large as well.
If a company is failing with software, then they may have losses. I don't know if Win Mobile is actually a loss for MS, though I doubt if they're doing well financially with it.
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 %.
GAAP is a lot more than subscription financing. But, yes, they do better non-GAAP.
[quote]
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.
Well, normally, they only drop prices when newer technology allows them to. Margins didn't go down though. They went up because overall sales went up more than expected. Between lower unit selling costs, and commodity price drops, they did better.
Could be. Speculation.
Seems pretty certain. I wouldn't doubt it.
He is probably referring to his statement right before that: In 20 years' time a lot of things can and will happen, but he is confident that in the next few years retail sales will remain the largest venue for video games and therefore the iPhone is not an immediate threat. He is really talking about the time line here, when does Nintendo have to take which steps towards online?
This has been going on for several years. Before the iPhone everybody told Nintendo that they have to copy XBox Live now or will be doomed. It hasn't turned out that way. Online revenues are still a small share of the market. Same for music by the way, the forerunner of online sales: Apple may sell more music than Walmart, but retail still represents 80 % of the market and digital sales are growing at a slow rate.
It didn't look as though he was talking about video or 20 years in reference to that statement.
At once refers to a very short time period. It looks as as though he was saying that it wouldn't happen shortly, but in a few years. I don't even think he would have said it at all if he meant 20 years.
In 20 years, its likely there won't even be standalone game machines. Not even computers as we know them today.
So, I should empty all the cartons of games, and her storage unit, and put them in piles according to the machine they're bought for? I don't think so.
Do you have a teenage daughter? If you do, you'll understand.
I use Delicious Library, I can go straight to it and see that we have for each platform, you should give it a go, it works well. And I believe it has an iPhone app as well.
But in saying that, some people have a lot of games, some have only a few, in the case of the Wii, it averages out to not many.
I use Delicious Library, I can go straight to it and see that we have for each platform, you should give it a go, it works well. And I believe it has an iPhone app as well.
But in saying that, some people have a lot of games, some have only a few, in the case of the Wii, it averages out to not many.
I don't know how many she has for each. And then she sells a few, and buys some more. The problems with catalog programs is that they're great if you start before you have a lot to do. But if you already have a lot, it's a pain. Not really worth it just to do it for myself. She always seems to know what she's got. Anyway, she's not here now, so the games machines are getting a long rest.
I'm curious, why do you carry an iPod with an iPhone? Is your iPhone mostly filled with apps with no room for music?
My 32GB 3GS has 20GB of songs, 2GB of movies and 3GB of apps. I just like to carry a separate iPod for music, usually my 8GB Touch or 120GB Classic.
The only area in which Apple was down for the last quarter was in iPods. Everything else was up. They had the highest sales of any non holiday quarter in their history, and the highest profits. They sold the most computers they ever sold.
Apple splits out the sales and profits of various divisions, computers included. They had a mix of less expensive models, that's why it looks that way.
I don't understand where you're getting your numbers from.
I'm referring to revenue which is down for 2 legs of Apple's "3-legged stool", as Steve Jobs put it:
iPod revenues have been deteorating for quite some time, which of course has something to do with the iPhone, but the drop in Mac revenue is not funny. As I've said above, I'm not overinterpreting this. Neither should be Nintendo's last quarter, but let's not open that subject again since we've already found an agreement on that quarter.
The story was attempting to show a specific situation. They were correct in what they said. I don't know what else they should have said.
The headline says "Nintendo warns". "Warning" is a loaded term in investor communication. It refers to profit warning or revenue warning. Nintendo however did not change any of their forecasts for their business year. This false impression is repeated in the first paragraph with the word "anticipate" even though Nintendo did not say that they anticipate anything negative.
The fourth paragraph gives the impression that there is some kind of "preference for Apple's business model" in the market and that "developers [are lured in] with the promise of much wider exposure", while in fact, as I've shown, retail video games are still the vastly dominant form in terms of revenue (1:25 or more) and many developers are very unhappy with the low and deteriorating price points specifically on the AppStore and view them as unsustainable.
The fifth paragraph claims without any qualifications that Apple has the superior hardware even though a) Nintendo has a proper d-pad and fire buttons, b) Apple has inadequate battery life and c) none of the console wars over the last 3 decades were won by the most powerful hardware except maybe the SNES generation (if you only look at the big players of that generation).
These were the winners of the console generations: Atari 2600, NES, SNES, Playstation, PS2, Wii and in handhelds Game Boy, Game Boy Color, Game Boy Advance, DS. Each of them (except maybe the SNES, which was slightly more powerful than the Sega Genesis) had strong competitors with superior hardware with better graphics and sounds, but in the end software quality became the deciding factor. The Game Boy also won on battery life by the way.
The sixth and seventh paragraph gives 2 positive quotes for iPhone gaming as a viable business which were not balanced with some of the many statements that went the opposite way. John Carmack has both praised and critized the platform, but only the better half is reproduced by AI.
And of course, all the facts that I've listed--which are current sales, not predictions or rumors--were omitted. Thus AI did not paint a full picture of both good and bad, present and potential, but rather made Nintendo a target of Apple fanboi derision.
The iP/T might very well surpass the DS(i) yearly sales in 2010. That's what I was saying. I don't think they will pass total sales then. 2012 is a better bet.
Actually you said "it's expected by the end of 2010", so you were quoting somebody and made it sound like a consensus among analysts or market watchers, which of course it's not.
I'm not going to get into those numbers, because they change when certain new games come out. The Nintendo numbers will move up or down much more than will the numbers for Apple. So it depends on when you're taking the readings.
No offense, but facts beat rumours and predictions anytime. This is what my posting was all about.
I think its too early to make a good comparison anyway. It's only been a year since Apple has had the app store, and it took several months until most of the more complex games came out. By the spring we should have a better idea.
Yet you made the comparison now. Telling me to come back later now that I've proven my original claims is a good tactic, but my claims stand. AppStore downloads are not in explosive growth anymore.
Nintendo's games cost four times as much as the equivalent iP/T game, so of course those people would be spending more.
It's actually closer to 10 times now, which is bad for developers, unless Apple can make it up in volume.
There was an article about a Nintendo developer who said that game companies made the same from an iP/T game as they made from a DS game. I don't know the name of the article offhand The better games for the iP/T sell for $7.99 and $9.99. That hasn't changed.
Are you an iPhone game shopper, personally? At launch, I have paid $9.99 for Enigmo. That game is now selling for $0.99. All games I bought for $5-10 at that time now sell for much less: Trism, Spore, Crash Racing, Rolando, Topple etc. etc. Gameloft recently dropped all their prices dramatically. Most bigger games are now released around the $5 price points and dropping soon. $9.99 are a rare exception. According to 148apps.biz, of 8.000 for-pay games on the AppStore, only 100 are priced $5.99 to $8.99 and 100 more are priced $9.99 or more. The typical price point is $0.99 with $4.99 the cut-off line.
In the review section of every popular iPhone game you will find comments that state "I love the game and enjoyed it for hours, but it should be [lower price], so I'm giving it only 4 stars.", and this is even for $2.99 or $1.99 games. I find this attitude ridiculous, but this is how shoppers are conditioned now. Basically, as a shopper, if you see a game that you like and can be a little patient (say, for a few weeks) you won't buy it immediately but rather wait until the price drops to $0.99.
I'm not saying it's UNprofitable. But they do make more money off the game licenses. Here's how much they make off each Wii sold, I wish they had the numbers for the DS. It also shows what they make of the licenses:
http://www.mcvuk.com/news/32535/Nint...Every-Wii-Sold
They might be making a few bucks more now, but not much.
You want to believe that, ok. I don't. It's really just some analyst, why are you building most of your arguments on unreliable forecasts and estimates?
Nintendo went with off the shelf parts, and not expensive ones. Their manufacturing costs are not much lower than they were when they first started. I was a manufacturer. I know how this works.
The Wii has a custom CPU and a custom GPU, unlike the iPhone and iPod which have off-the-shelf parts. Apple is still working on their own chips, as we know. The Wii also has a custom controller which was an absolute first in all of consumer electronics.
It will take a lot more sales before the Wii's manufacturing costs come down much. I'll bet it costs them 75% of what it did at the beginning.
If that analyst says that the Wii is now sold with a 5 % margin and you think Nintendo have brought the cost down 25 % my calculator tells me that Nintendo would originally have sold the Wii at a 21 % loss. This in direct contradiction to their statements that it was profitable from the start.
I'll bet they have a high return rate for those.
Why would it be any different than Apple's? Nintendo is a household name, generations have grown up on the GameBoy. Their products are generally considered reliable. In terms of news items, Apple is of course the company that faces new claims of product defects every day, not Nintendo (seen the exploding iPod girl from Liverpool?). If Nintendo indeed had a higher return rate (which you cannot prove) that would only make their software sales more impressive in terms of attachment rate.
the talk is that we may see major games for more.
John Carmack is mildly disappointed by the sales of Doom. The term "major games" can of course be stretched. We will certainly see major franchises on some watered down and derivative form or other.
From a few perhaps. The tome is that Apple may exceed Nintendo in a few years, which is certainly correct.
The tone I heard from many was that Nintendo is a weak competitor, which is the impression that AI gave in the first place. The tone from you is that everything will multiply for Apple in the future and the present state of the AppStore does not count.
See where I'm going? In a few years, a DS(whatever) may not be recognizable to you. If that happens, we won't be talking about a nintendo handheld "game machine" anymore.
Exactly my words, except that "a few" would be 5 or more years.
I'm referring to revenue which is down for 2 legs of Apple's "3-legged stool", as Steve Jobs put it:
iPod revenues have been deteorating for quite some time, which of course has something to do with the iPhone, but the drop in Mac revenue is not funny. As I've said above, I'm not overinterpreting this. Neither should be Nintendo's last quarter, but let's not open that subject again since we've already found an agreement on that quarter.
The headline says "Nintendo warns". "Warning" is a loaded term in investor communication. It refers to profit warning or revenue warning. Nintendo however did not change any of their forecasts for their business year. This false impression is repeated in the first paragraph with the word "anticipate" even though Nintendo did not say that they anticipate anything negative.
The fourth paragraph gives the impression that there is some kind of "preference for Apple's business model" in the market and that "developers [are lured in] with the promise of much wider exposure", while in fact, as I've shown, retail video games are still the vastly dominant form in terms of revenue (1:25 or more) and many developers are very unhappy with the low and deteriorating price points specifically on the AppStore and few them as unsustainable.
The fifth paragraph claims without any qualifications that Apple has the superior hardware even though a) Nintendo has a proper d-pad and fire buttons, b) Apple has inadequate battery life and c) none of the console wars over the last 3 decades were won by the most powerful hardware except maybe the SNES generation (if you only look at the big players of that generation).
These were the winners of the console generations: Atari 2600, NES, SNES, Playstation, PS2, Wii and in handhelds Game Boy, Game Boy Color, Game Boy Advance, DS. Each of them (except maybe the SNES, which was slightly more powerful than the Sega Genesis) had strong competitors with superior hardware with better graphics and sounds, but in the end software quality became the deciding factor. The Game Boy also won on battery life by the way.
The sixth and seventh paragraph gives 2 positive quotes for iPhone gaming as a viable business which were not balanced with some of the many statements that went the opposite way. John Carmack has both praised and critized the platform, but only the better half is reproduced by AI.
And of course, all the facts that I've listed--which are current sales, not predictions or rumors--were omitted. Thus AI did not paint a full picture of both good and bad, present and potential, but rather made Nintendo a target of Apple fanboi derision.
Actually you said "it's expected by the end of 2010", so you were quoting somebody and made it sound like a consensus among analysts or market watchers, which of course it's not.
No offense, but facts beat rumours and predictions anytime. This is what my posting was all about.
Yet you made the comparison now. Telling me to come back later now that I've proven my original claims is a good tactic, but my claims stand. AppStore downloads are not in explosive growth anymore.
It's actually closer to 10 times now, which is good for developers, unless Apple can make it up in volume.
Are you an iPhone game shopper, personally? At launch, I have paid $9.99 for Enigmo. That game is now selling for $0.99. All games I bought for $5-10 at that time now sell for much less: Trism, Spore, Crash Racing, Rolando, Topple etc. etc. Gameloft recently dropped all their prices dramatically. Most bigger games are now released around the $5 price points and dropping soon. $9.99 are a rare exception. According to 148apps.biz, of 8.000 for-pay games on the AppStore, only 100 are priced $5.99 to $8.99 and 100 more are priced $9.99 or more. The typical price point is $0.99 with $4.99 the cut-off line.
In the review section of every popular iPhone game you will find comments that state "I love the game and enjoyed it for hours, but it should be [lower price], so I'm giving it only 4 stars.", and this is even for $2.99 or $1.99 games. I find this attitude ridiculous, but this is how shoppers are conditioned now. Basically, as a shopper, if you see a game that you like and can be a little patient (say, for a few weeks) you won't buy it immediately but rather wait until the price drops to $0.99.
You want to believe that, ok. I don't. It's really just some analyst, why are you building most of your arguments on unreliable forecasts and estimates?
The Wii has a custom CPU and a custom GPU, unlike the iPhone and iPod which have off-the-shelf parts. Apple is still working on their own chips, as we know. The Wii also has a custom controller which was an absolute first in all of consumer electronics.
If that analyst says that the Wii is now sold with a 5 % margin and you think Nintendo have brought the cost down 25 % my calculator tells me that Nintendo would originally have sold the Wii at a 21 % loss. This in direct contradiction to their statements that it was profitable from the start.
Why would it be any different than Apple's? Nintendo is a household name, generations have grown up on the GameBoy. Their products are generally considered reliable. In terms of news items, Apple is of course the company that faces new claims of product defects every day, not Nintendo (seen the exploding iPod girl from Liverpool?). If Nintendo indeed had a higher return rate (which you cannot prove) that would only make their software sales more impressive in terms of attachment rate.
John Carmack is mildly disappointed by the sales of Doom. The term "major games" can of course be stretched. We will certainly see major franchises on some watered down and derivative form or other.
The tone I heard from many was that Nintendo is a weak competitor, which is the impression that AI gave in the first place. The tone from you is that everything will multiply for Apple in the future and the present state of the AppStore does not count.
Exactly my words, except that "a few" would be 5 or more years.
Thanks for the long but informative post.
That's what I'm saying. It's maturing. but they haven't killed the PSP by any means. It's possible that nintendo AND Apple together may kill it.
Cycle is maturing, not the market. There have been many cycles before.
There are a lot of others. Some predict lower growth rates, some even higher. This recession has slowed everything down.
I was curious about the 75 % prediction because currently more than half of phone sales are in developing countries. To reach 75 % worldwide smartphones would not only have to sweep the richer countries but also take a significant share in the developing countries. Hence I suggested that $100, not $500 as today, would have to become the average price point for smartphones before that kind of market size can arrive.
I doubt that. The iPhones are continuing to improve at a much greater rate than game machines do.
True, looks like Apple is going for a 2-year-cycle in terms of CPU/GPU upgrades.
OS v 3.0 and the Apple connector has allowed for items like these:
http://www.22moo.com.au/gamebonepro.html
http://www.icontrolpad.com/
Shortly we'll have what some gamers complain about, physical controllers.
Your wording seems to implie that you don't sympathize with those customers' desires? We will see if these products reach the market. The Gamebone looks weird and is just a render while the icontrolpad is already in prototype stage, but was developed under Jailbreak conditions, not official OS 3.0, and the weblog has seen no update since January. They will need to find adoption from customers and developers at the same time, which is a big hurdle, epecially if there's no common standard. An approach by Apple or at least by a big firm like Logitech oder Belkin would be more successful, but if one those two products comes to market it might help, too. The battery problem still persits.
I'm referring to revenue which is down for 2 legs of Apple's "3-legged stool", as Steve Jobs put it:
iPod revenues have been deteorating for quite some time, which of course has something to do with the iPhone, but the drop in Mac revenue is not funny. As I've said above, I'm not overinterpreting this. Neither should be Nintendo's last quarter, but let's not open that subject again since we've already found an agreement on that quarter.
As I mentioned, Apple's prices have been lower, which is why revenue, during this serious recession is just a little bit lower. You also said that computer sales were down, which they were not, they were up. No one considers Apple revenues to be a problem. In fact, they are lauding that the drop was so small in this difficult time. Overall, Apple sales and profits are up, unlike Nintendo's which are seriously down overall.
And as you say, it's Apple higher priced products that are accounting for most, if not all of the iPod drop, in both units and revenue, so it really doesn't matter. In fact, that's considered to be a bright spot for Apple, not the poor one that you are trying to make it out to be. The iTouch sales are 130% higher than last year, that an awful lot. Apple would no doubt be very happy if people stop buying cheaper iPods in droves, and instead migrated to the iP/T platform, as they seem to be doing.
Get out of a business that seems to be about saturated, and into one that has a lot of room to grow, with more profits for Apple at the same time.
With industry computer sales around the world experiencing a drop in sales, the fact that Apple has clawed themselves to two quarters of increased sales, though small, is considered in the industry to be very good indeed. Just go and read any article about it. Apple is still gaining marketshare, not losing it, except for the netbook sales, which Apple doesn't care for, and doesn't affect their business.
The headline says "Nintendo warns". "Warning" is a loaded term in investor communication. It refers to profit warning or revenue warning. Nintendo however did not change any of their forecasts for their business year. This false impression is repeated in the first paragraph with the word "anticipate" even though Nintendo did not say that they anticipate anything negative.
I wasn't there, so I don't know if Nintendo was giving a warning, a caution, or an acknowledgement. In the end it means pretty much the same thing. Companies, by law almost everywhere, must give notice in their filings of whatever may have a negative affect on their business. Apple does this every quarter.
It's normally not a big deal. But when the filings are poured over, anything new is looked for. When something new is found, they all pile upon that. As Nintendo mentioned this, apparently, in their conference, it was publicly noted. Why did they mention Apple? How much of a threat do they think it is, etc. Big news. Apple is a new competitor for them. That's a big story. Whenever an industry, which is lazy in its ways, because each company pretty much knows what the others will be doing, is shaken up by a newcomer, that makes the headlines. Often, the newcomer fails to gain long term traction. But if they have a lot of money behind them, and they have a good rep, they must be taken seriously.
When they have products that don't depend on the industries' main business, but will compete there, that's a very big problem. That's what made MS so dangerous over the years, though they've been less successful as of late against Apple.
'quote]
The fourth paragraph gives the impression that there is some kind of "preference for Apple's business model" in the market and that "developers [are lured in] with the promise of much wider exposure", while in fact, as I've shown, retail video games are still the vastly dominant form in terms of revenue (1:25 or more) and many developers are very unhappy with the low and deteriorating price points specifically on the AppStore and view them as unsustainable.[/quote]
Ok, now let's look at what's really happening here. First of all, most of what you read is really about the iPhone against other phone manufacturers, not against Nintendo. The Apple model is very compelling indeed. Far more so than what's come before. All other phone manufacturers are trying to catch up in phones and application stores. Even a big network in the name of Verizon is trying to cash in on that idea.
The phone manufacturers know that apps now sell phones as much as the phones themselves do.
What's different about Apple's phones (and the iPod Touch) is that all the models so far, can use most all of the apps. There are some that require new hardware, such as 3G, GPS, compass, and such, but even then, a lot of that software works on the older models but not with all the features.
This gives Apple's model a big leg up over the other manufacturers, who have phones out concurrently with different versions of the same OS which can't be upgraded on those phones, different OS's, and totally different phones. Totally different. So most of their phones can't use most of the apps they may have They've presented no continuum of ideas for their lines, coming out willy nilly with new models, often having little relationship with earlier models. They are just now beginning to understand how that has hurt them.
None of them, no matter what games they may have, can challenge Nintendo, or Sony. But Apple can.
The fifth paragraph claims without any qualifications that Apple has the superior hardware even though a) Nintendo has a proper d-pad and fire buttons, b) Apple has inadequate battery life and c) none of the console wars over the last 3 decades were won by the most powerful hardware except maybe the SNES generation (if you only look at the big players of that generation).
It's interesting, but as with virtual keyboard over physical keyboards on phones, it seems that people who are used to the "real" buttons often favor them over the virtual ones, at least in the beginning. But people who have never used a smartphone before, and so haven't used those tiny QWERTY bubble keyboards seem to prefer the virtual ones from the first.
As the population isn't static, and people age through certain points of their lives, we are getting people using an iPhone for the first time, just as there are those using a DS for the first time. As more people experience an iPhone at an earlier age, they will become used to controls that are different.
Remember that it was said in almost all the game mags and sites (at least, all the ones I read) that the Nintendo Wii controllers would be a failure. You remember that, right? But those people were wrong. The controllers became popular, because the games used them well.
The controls for the iPhone are different s well. At first, my daughter, a very big gamer, didn't like them, but after she bought more games, she found that they worked pretty well. Now that she's got a 3GS, she tells me that they work much better, because they are more responsive. There are still some games she would like more conventional controls for, but as you saw earlier, from the links I posted, if you read them, companies are coming out with controllers which will fix that problem as well.
As for quality, the iP/T are pretty high quality, and both the graphics and cpu are very much superior to what is in the much cheaper DS. That's to be expected, and shouldn't be surprising. It's also well known.
[/quote]
These were the winners of the console generations: Atari 2600, NES, SNES, Playstation, PS2, Wii and in handhelds Game Boy, Game Boy Color, Game Boy Advance, DS. Each of them (except maybe the SNES, which was slightly more powerful than the Sega Genesis) had strong competitors with superior hardware with better graphics and sounds, but in the end software quality became the deciding factor. The Game Boy also won on battery life by the way.[/quote]
The Gameboy's and later, are not consoles. You also forgot, or don't know about the Atari Lynx, which I bought, and was far superior to anything in its day. Actually pretty good even today. But the Tramiels, who owned Atari, screwed the company up, so it all disappeared.
Several of those companies disappeared. Atari's 2600 was the first real console, and had no competition for a while.
You also forgot the Coleco. That was a big winner as well. Very important console. amazing graphics for the time, and killed the 2600. You also don't mention the Intellivision, which I also have, and was a very important unit, and had very large sales. It was also considered to have some of the best gameplay of all the machines.
Again, though, you're forgetting that while Nintendo DEPENDS of game sales, Apple does not. Even if Apple removed all games for the app store, the devices would still be a success, though not as big perhaps.
The sixth and seventh paragraph gives 2 positive quotes for iPhone gaming as a viable business which were not balanced with some of the many statements that went the opposite way. John Carmack has both praised and critized the platform, but only the better half is reproduced by AI.
A lot of what Carmak criticized disappeared with the appearance of the 3GS. He said that himself. Most of his problems were with hardware performance vs the OS. At first he was saying that Apple should strip the OS of whatever slowed the hardware down for gaming, which was ridiculous. But with the release of the 3GS he said the problems were resolved. Perhaps thats why AI didn't mention the negatives that Carmack himself said no longer applied.
And of course, all the facts that I've listed--which are current sales, not predictions or rumors--were omitted. Thus AI did not paint a full picture of both good and bad, present and potential, but rather made Nintendo a target of Apple fanboi derision.
I'm not so sure that all of those "facts" are facts, but rather opinions of what the "facts" mean. Other numerical "facts" you've supplied are not what you seem to think, as those for Apple financials show. Sometimes, the numbers don't mean what you want them to. How about the fact that Wii sales dropped about in half. What about DS sales? Are these problems for Nintendo other than from the recession, or are they fundamental problems? I've not commented on which they are, but you might want to.
Actually you said "it's expected by the end of 2010", so you were quoting somebody and made it sound like a consensus among analysts or market watchers, which of course it's not.
You would have to quote the entire part where I said that, because I don't know to what you are referring. I never said what you are saying I did, in they way you are saying I did, and it would be good of you to drop it, as I've told you what I meant twice now, ok?
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No offense, but facts beat rumours and predictions anytime. This is what my posting was all about./quote]
Your posts are all about a frenzied defense of Nintendo. Starting with a denial of what Nintendo said, and moving from there.
Yet you made the comparison now. Telling me to come back later now that I've proven my original claims is a good tactic, but my claims stand. AppStore downloads are not in explosive growth anymore.
I had to to give you some response that made more sense than yours. Even if the stores' growth was 10% a month, most people would consider that to be "explosive". Even 5% would be a thrill for most companies, including Nintendo.
It's actually closer to 10 times now, which is bad for developers, unless Apple can make it up in volume.
No, that's not true. You refuse to separate the major games from the ones done by one individual on their own time, or a very small company, that is very happy with small sales. Mot of these small companies would not be able to get a game on Nintendo's platform at all. They make good money where they wouldn't make any. Apple's platform can support a vastly larger population of developers than can Nintendo's, because the cost to produce most games for Apple are far smaller than for Nintendo. And the production costs are vastly less as well. Apple only takes a 30% cut, and does all the rest of the work. A developer for Nintendo only gets a few percent of the price.
Therefor, we can have many more "little" games, which is what most people prefer anyway, that just sell in the hundreds of thousands, or even less, and have the developer make a good profit. but these games on the Nintendo would never even make it through the screening process, because they are so expensive to do that Nintendo can't allow a game that might sell 10,000 copies. If it happens, it was a mistake.
Are you an iPhone game shopper, personally? At launch, I have paid $9.99 for Enigmo. That game is now selling for $0.99. All games I bought for $5-10 at that time now sell for much less: Trism, Spore, Crash Racing, Rolando, Topple etc. etc. Gameloft recently dropped all their prices dramatically. Most bigger games are now released around the $5 price points and dropping soon. $9.99 are a rare exception. According to 148apps.biz, of 8.000 for-pay games on the AppStore, only 100 are priced $5.99 to $8.99 and 100 more are priced $9.99 or more. The typical price point is $0.99 with $4.99 the cut-off line.
I've bought a dozen games or so. I'm not nearly as big a game player as I was when I was younger. I have much more interesting things to do such as arguing with you ABOUT games.
But your choice of Enigmo, which I bought when it first came out, is a good example of why Apple's way is so good. Enigmo sold a lot of copies at the higher price. For a long time it was one of the most popular games. The fact that distribution costs are almost nothing means that after a game loses popularity, but is still selling somewhat, a developer can continue to drop the prices to encourage sales. There is no cost to them, or to Apple. Everything after a certain number of copies have been sold is pure profit.
Nintendo can't do that because of all the royalty costs along the line, as well as the fixed costs for the cartrige and packaging, as well as the distribution costs, and the store mark-up. (Even their downloadable games are stuck with much of that. If the price of the game falls too low, it will be removed from the shelves because shelf space is expensive. The game is then gone, except for the occasional used copy which give only the store a benefit.
Apple's way insures that the shelf space is almost infinite. It costs nothing. Both Apple and the devekoper can make money from that game as long as people are willing to spend 99 cents for it.
A wonderful situalion for all concerned. And when sales drop to the point that the developer feels that their newer products can use some advertising, they can change it to a free game. That's just great! How many of Nintendo's older games are seen in stores for 99 cents, or for free?.
In the review section of every popular iPhone game you will find comments that state "I love the game and enjoyed it for hours, but it should be [lower price], so I'm giving it only 4 stars.", and this is even for $2.99 or $1.99 games. I find this attitude ridiculous, but this is how shoppers are conditioned now. Basically, as a shopper, if you see a game that you like and can be a little patient (say, for a few weeks) you won't buy it immediately but rather wait until the price drops to $0.99.
There are always some who will think that. There are plenty of people who won't buy a Nintendo product, or one from MS, or Sony, because the games cost way too much.
But as I said before, the large fixed costs require heavy prices. That's not a good thing. It costs far less to do a game for the iPhone, and so the price should be far less. They can still make a good profit. Even developers who sell apps for 99 cents have said they make good money.
If a game costs just a few thousand to do if one person is doing it, then how much should it cost? If you sell just 50,000 copies at 99 cents, that's almost $35,000 profit. If that game just took a month to do, that's pretty damn good, and is why so many are writing apps for the system.
You want to believe that, ok. I don't. It's really just some analyst, why are you building most of your arguments on unreliable forecasts and estimates?
Because they do usually get close to the truth. You are acting as your own analyst. Why should I believe anything you say?
The Wii has a custom CPU and a custom GPU, unlike the iPhone and iPod which have off-the-shelf parts. Apple is still working on their own chips, as we know. The Wii also has a custom controller which was an absolute first in all of consumer electronics.
The Wii is off the shelf. It's a low end cpu and gpu. Any mods were very simple. This has been written about endlessly when it first came out. It's not much of an advance over the Gamecube.
If that analyst says that the Wii is now sold with a 5 % margin and you think Nintendo have brought the cost down 25 % my calculator tells me that Nintendo would originally have sold the Wii at a 21 % loss. This in direct contradiction to their statements that it was profitable from the start.
I did say that the cost to produce could have come down by 25%, but that was just speculation on an extreme, as I see it. I really don't think their costs have dropped that much. But marketing costs have risen if anything because of the recession, and sales have declined. That all effects the margins.
Why would it be any different than Apple's? Nintendo is a household name, generations have grown up on the GameBoy. Their products are generally considered reliable. In terms of news items, Apple is of course the company that faces new claims of product defects every day, not Nintendo (seen the exploding iPod girl from Liverpool?). If Nintendo indeed had a higher return rate (which you cannot prove) that would only make their software sales more impressive in terms of attachment rate.
Because most people I know have had theirs break? IT's a cheaper product so people don't care as much.
Reports of Apple problems are rare. This "exploding" unit is extremely rare. I think it has happened to one or two others. and people threw them first. It's also a battery problem. The iP/T has been very reliable.
John Carmack is mildly disappointed by the sales of Doom. The term "major games" can of course be stretched. We will certainly see major franchises on some watered down and derivative form or other.
Well, its an older game. I don't know how sales of old games are going to do now. We would need a contemporary game from him to see how it does. But sales were pretty good according to him, but he hoped they would be even higher.
The tone I heard from many was that Nintendo is a weak competitor, which is the impression that AI gave in the first place. The tone from you is that everything will multiply for Apple in the future and the present state of the AppStore does not count.
Don't make the mistake of making me responsible for what everyone else says. Everyone is entitled to their own opinion, even if we don't agree with it.
Everything will multiply in the future. I'm surprised you don't see that, even though you acknowledge that the sales of the iP/T will be several times as much as they are now on a yearly sales basis. If the store just barely keeps up, then it will have a multiple of the sales it has now. Thats just third grade math.
Apple has sold between 45 and 50 million of the devices by now, maybe more. Perhaps 10%are out of commission, but the rest seem to get recycled. I don't know how many of the 100 million DS's are still working, and I won't guess.
But in a few years, Apple will have 200 million working. That's a lot of units, and a lot of software sales.
Exactly my words, except that "a few" would be 5 or more years.
Ok, let's say 5 years. Let's even say six. Or maybe four. Whatever. The point is that it's likely to happen. If not, Nintendo is in trouble.
most of the analysis being done is from what we know about Nintendo. They are a game company. Can they transition to a company that moves partly away from games with more sophisticated devices and software? They would have to do a major reworking of their DSOS. They can't just add API's if the OS isn't intended to do much of this.
Personally, I hope they can. I like Nintendo. I want to see them thrive. At the very least, Apple needs successful profitable competitors.
I really like Apple, for their products, and their stock, but I don't want to see them alone out there.
Oh, and please, let's try to keep these posts shorter. It took forever to reply to this one. Thanks.
Cycle is maturing, not the market. There have been many cycles before.
Like the market for music players, the handheld game market is maturing as well.
I was curious about the 75 % prediction because currently more than half of phone sales are in developing countries. To reach 75 % worldwide smartphones would not only have to sweep the richer countries but also take a significant share in the developing countries. Hence I suggested that $100, not $500 as today, would have to become the average price point for smartphones before that kind of market size can arrive.
Smartphone prices are coming down. That leads to wider adoption, even in poorer markets. The iPhone as sold for outrageous prices in the poorest markets around the world, even though most of those phones were brought in by means of the "grey" market.
Apple now does have a phone for $99. Yes, you need a contract. but plenty of people get contracts.
If Apple does this every year, that is drop the price of last years model to $99 while coming out with newer ones, that will prove popular. And in many countries where people are poor, an expensive cell phone is their item of prestige. They can't afford a car, or a big Tv, or apartment, but they are willing to save up for a phone.
True, looks like Apple is going for a 2-year-cycle in terms of CPU/GPU upgrades.
I'm pretty sure we'll see the fruit of Apple's purchase of PA next year. The talk is about the dual core cpu with whatever features Apple will add into it. Also a much faster GPU with Open GL 3.
Your wording seems to implie that you don't sympathize with those customers' desires? We will see if these products reach the market. The Gamebone looks weird and is just a render while the icontrolpad is already in prototype stage, but was developed under Jailbreak conditions, not official OS 3.0, and the weblog has seen no update since January. They will need to find adoption from customers and developers at the same time, which is a big hurdle, epecially if there's no common standard. An approach by Apple or at least by a big firm like Logitech oder Belkin would be more successful, but if one those two products comes to market it might help, too. The battery problem still persits.
I do sympathize with them. I just don't know what the percentage is.
I do think, as I've said, that newcomers to handheld gaming might not be so opposed to the controls the devices have now.
Some heavy gamers complain about the lack of physical interfaces. how many are they, really?
I say let's wrap it up for now since everything has been said, and we're partly going off topic, partly accusing each other of who has or has not said what where in this sprawling conversation, something that depresses and scares me, frankly. The video game market has become interesting again, that's for sure. Greatings from sunny Berlin. Have a nice weekend!
It's always nice to see a make-up.