When you think of companies that derive most of their revenue from mobile devices and software, you might think of Symbian or Research In Motion, but Nintendo certainly qualifies. In its 2002 fiscal year, about 60 percent of Nintendos hardware revenue came from its Game Boy products and about 70 percent of its higher-margin software revenue came from its handheld platform.
Nintendo has been able to capitalize on a monopoly position after years of putting finishing moves on such competitors as Segas Game Gear, SNKs Neo Geo Pocket, and Hasbros forgettable Game.com. Its recipe for success has included developing an ever-growing cadre of memorable characters and placing them into beautifully crafted games. Few developers embody the art of game design as Nintendo (videogamings answer to Disney).
Recently, however, this magic kingdom has come under siege from more formidable competitors. In one corner is the growing phalanx of mobile handset game developers including Jamdat Mobile, Sorrent, and console game developer offshoot THQ Wireless. Expect these offerings to increase as Sun and Qualcomm step up evangelism efforts for J2ME and Brew.
Games developed with these technologies are already starting to rival the graphic quality of Game Boy Advance games. Their interfaces, optimized for the casual gamer and streamlined by access to permanent storage, allow quick amusement for many subway riders here in New York City. These gamers attract a few looks peering into their screens and madly pressing buttons, but all in all are less outcasts than adults using even the stylish Game Boy Advance SP. As the cell phone game crowd is fond of saying, people outgrow the Game Boy at some point.
One company that certainly agrees with that perspective is Sony. Its PlayStation Portable (PSP) announced at E3—which the company has labeled "the Walkman of the 21st Century"—will be a technological tour de force, but not exactly a tiny one. Boasting a Memory Stick slot, USB 2.0, proprietary UMD optical media (complete with tasty plastic coating) and a whopping 4.5" display, the PSP will likely be more akin to one of the emerging portable video players than the squat and square Game Boy Advance SP. Indeed, the PSPs screen dimensions alone already dwarf those of the chunky Archos AV300. It wont be something you casually toss into your pocket.
Still, with cell phones nipping at its heels and Brandzilla hovering above its head, Nintendo should reconsider the long-running weaknesses we find in its product strategy.