With 28 million Nintendo Wii consoles sold around the world it is no longer possible to declare its success a fad. But can Nintendo sustain its phenomenal momentum?
Nintendo’s global president Satoru Iwata is humble enough to admit that even he had been surprised by the epidemic-like success of the Wii console.
He told BBC News: “It was so fast. We knew the Wii was the right direction for the company. But the question was always how many years it would take to find success.”
The answer was two years. In that brief time Nintendo has dramatically altered its fortunes in the home console business, while at the same time maintaining, and even improving, its dominance in the handheld gaming space with the DS.
Play time
The change of fortunes began when Mr Iwata took over as president of Nintendo in 2002, only the fourth man to hold the position since the company was founded 109 years ago.
Speaking to BBC News at the Electronic Entertainment Expo (E3) In Los Angeles, he said: “Five years ago when I was appointed I thought that if we didn’t do anything but took the same route there would be no bright future for the entire industry.
“So we decided we needed to increase the number of people gaming.
“We started thinking about people who weren’t playing games and asked ourselves why they were not interested. And why had some people stopped playing despite playing in their youth?”
The solution was not a rush towards a high definition games platform targeted at the hard core gamer but remembering the simple pleasures of playing with family and friends.
The Wii console introduced a mass market of gamers to motion-sensitive play, replacing the button-laden controller with a wand that could direct action with the flick of a wrist.
Within weeks of the Wii’s launch people were taking their new console around to the homes of friends and family, and word of mouth quickly spread.
“It was so fast because those who appreciated the new attractions of Wii must have been those who used to play video games. And these people were telling friends and family about the console.
“People who first started playing with the Wii were so excited that they had to spread the news.”
History lesson
The success came after the perceived disappointment of the GameCube, which finished its lifespan behind the PlayStation 2 and Xbox in terms of global sales, selling 22 million units over seven years.
Nintendo had tried to compete directly with Microsoft and Sony and failed.
Its resulting and ultimately successful move was to realise that the market of people who could play games but were not was much bigger than the market of those already playing games on a regular basis.
“It was somewhat out of the boundaries of common sense for the time,” said Mr Iwata.
“From the perspective of people from outside the industry it might have looked like a gamble. But I do not think it was a gamble at all.”
One of the original criticisms of the Wii at launch was that the underpowered machine would increasingly suffer in comparison to the PlayStation 3 and Xbox 360 as the machines went through their lifecycle.
But Mr Iwata dismissed talk of a console lifespan as nonsense and somewhat irrelevant.
“After all, the primary concern is not to let consumers purchase hardware but to enjoy software,” he said.
Future fun
But that did not mean Nintendo was not already thinking about life beyond the Wii.
“However hard our software developers try to create new and unprecedented titles with great ideas eventually there will be a day when devs will say they have no more means with that hardware.
“That’s exactly the time we need to introduce people to new hardware. We do want to be flexible about this,” he said.
“We just don’t want to decide upon a fixed lifecycle of any platform.”
Addressing another criticism of the Wii, Mr Iwata said it was a “misunderstanding and misconception” to say that the console was struggling to attract support from developers outside of Nintendo.
“The number of third-party titles for Wii is actually more than what is available for other platforms.
“And in the initial launch platform period for any platform, the third-party software titles for Wii are outselling any of the third-party titles for other platforms.”
Nintendo remains the home for some of gaming’s most enduring franchises and icons, from Mario to Zelda and the success of the Wii has ensured they will remain part of the landscape for some time to come.
But there were no details of any new Mario or Zelda titles given at the recent press conference held by Nintendo to highlight its plans for the months ahead.
“At this E3 we had to focus on software for the mass audience and software that will be sold in this year or next.
“This one of the rare opportunities to reach out to mass audiences around the world.
“In order for us to create a new Super Mario game or Legend of Zelda game that can cater to the strong demands of core gamers around the world it takes two to three years.”
While its competitors battle to become the multimedia hub for the digital living room Nintendo is determined to continue on its course of “putting smiles on people’s faces”.
He said: “All we have got to do is carry on. People are going to get tired of new proposals. We have to offer them new proposals before they do.
“We really want to keep surprising people,” he said, then added: “It’s not easy at all.”
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Hitachi was first to hit the terabyte mark when it announced the 1TB Deskstar 7K1000 hard drive in January 2007. Fast forward a year and a half, and the company is back with not a larger version of the drive but a more efficient model in the Deskstar 7K1000.B. Like its predecessor, the 7K1000.B is a 3.5-inch, 7,200rpm hard drive that serves up 1TB of storage space and a 32MB buffer. It hits that magic terabyte mark, however, by using only three disks–down from the five-disk design of the older 1TB drive. It also borrows from Hitachi’s 2.5-inch mobile drives and includes Bulk Data Encryption.
Hitachi says the new three-disk design improves idle power consumption up to 43 percent compared with last year’s model. Fewer platters should also mean improved reliability, acoustics, and seek times. The Deskstar 7K1000.B also matches Samsung’s Spinpoint F1, which was the first three-disk drive to offer 1TB of capacity.
While desktops go missing at a much slower rate than laptops, that didn’t deter Hitachi from offering Bulk Data Encryption on the Deskstar 7K1000.B. This feature encrypts data as it is written to the drive and decrypts when it’s retrieved. This hard drive-level security is superior to software or system-level security measures, and it has no impact on system performance.
The Hitachi Deskstar 7K1000.B will sell for $239 when it starts shipping later this month. Hitachi will also ship the Deskstar E7K1000 this month for $279, an enterprise version of the drive designed for low-duty-cycle, 24×7 applications.
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Nokia wants some of Apple’s rhythm. On July 1 the Finnish mobile-phone maker said that Warner Music Group has agreed to participate in Nokia’s fledgling music service, making Warner the third of the major record labels to join in the effort. The move is one more step in Nokia’s effort to compete against Apple for the people who want to carry around music libraries in their pockets.
Nokia’s service, which will officially launch in the second half of this year, is called Comes With Music. It will be built into certain Nokia handsets and will allow customers to download unlimited amounts of music from participating labels. The downloaded music can be kept on a PC or mobile-phone forever. In theory, a consumer could download every single song from the labels’ catalogs; they’d simply need a very big hard drive on which to store the files. Nokia and its partners have not disclosed pricing for the service, but they believe it has plenty of potential. “We believe this will be a significant contributor of revenue over a long-term basis for Nokia,” says Liz Schimel, global head of music for Nokia.
(Almost) All Aboard
The record labels seem to be buying that argument. Universal Music Group in December signed up with Nokia, and Sony BMG Music Entertainment partnered with the service in April. A spokesperson for EMI Group, the sole major label yet to join, says the company is talking with Nokia, although no deal has been reached. Nokia says it is in talks with independent labels as well.
For the music industry, the Nokia venture represents a departure from the old ways of doing business. Susan Kevorkian, program director of consumer markets at research firm IDC, says there is “broader experimentation” as CD sales decline and music revenues slide overall. For record companies, it may make sense to look for new ways to sell the work of their artists. Ringtones, for example, have become a multibillion-dollar business in only a few years. “We have a long-term sustainable business for Nokia, the music industry, and the artists,” says Schimel.
It’s hard to evaluate the service before pricing and other specifics are known. Nokia remained tight-lipped about the details of Comes With Music as it unveiled the Warner Music partnership. But Apple has said that it makes little money on music sales through its iTunes store, instead generating profits from sales of iPods and other hardware. Will the music business for Nokia and its partners also be of marginal financial benefit? Schimel says such comparisons are off-base. “We feel it is apples and oranges,” she says. “We are offering a structure that will attract new customers and new revenues.”
Will It Pay?
Some analysts are skeptical that Comes With Music will help Nokia attract new customers for its mobile phones. James McQuivey, a principle analyst at Forrester Research says, “There won’t be the same rush to buy Nokia phones” as there is for iPhones. Apple is expected to sell 10 million iPhones by yearend. McQuivey guesses that at most Nokia could sell between 2 million and 4 million handsets in the year following Comes With Music’s launch. The amount of revenue the company earns from downloads will depend on how much Nokia intends to charge consumers. But it is sure to be insignificant at a company that made $10.6 billion last year on sales of $75 billion.
IDC’s Kevorkian sees this as part of a bigger move by Nokia and the music industry. “It is a slim revenue margin, but it makes sense as part of a volume play for Nokia, who is in the midst of transition,” she says. Kevorkian sees Comes With Music as fitting into Nokia’s Ovi service, a broad effort to sell services to mobile-phone users.
Still, McQuivey thinks Nokia and its partners may find few takers for the new music service. He argues that music enthusiasts won’t be satisfied with a phone that’s merely adequate for listening to tunes, while other people won’t be willing to pay money for such music services. He says it’s a lot like digital cameras. Some people use their phone as a digital camera, but people taking lots of photos will generally purchase a separate, higher-quality digital camera. “It’s a mismatch in market opportunity,” says McQuivey.
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