updated 02:20 pm EDT, Thu July 30, 2009
Nintendo Hurt by iPhone
Nintendo today encountered a rare setback in its history owed partially to the impact of Apple on its business. The company's profit has dropped a steep 66 percent year-over-year to $426 million and said in a conference call that the iPhone and iPod touch, not Sony's PSP, are having the greatest impact on the performance of the DS and DSi. It also expects its fiscal 2010 profit to drop for the first time in years as a result of the added pressure from Apple's touchscreen devices.
The Japanese company didn't outline what if any steps it would take to compete against Apple. The latter inadvertently became a competitor to Nintendo after the launch of the App Store brought a disproportionately large number of games to the iPhone and iPod, encouraging their creator to devote more of its resources to game developers and producing more game-friendly hardware. Apple's devices are much faster at intense graphics than the DS and are helped by the low prices of their download-only titles, many of which cost $10 or less compared to the $30 typical for Nintendo's cartridge-based games.
Critics often believe the DSi was meant as a partial response to Apple that would include a camera, a basic music player and a web browser as well as support for downloadable games. That advantage in creating images may erode with multiple rumors of an iPod touch with camera being introduced this September, possibly with video capture.
Sales of the Wii also unusually plummeted, dropping from just under 5.2 million in spring 2008 to just over 2.2 million this past quarter. With Microsoft likely having only made small gains and Sony's PS3 shipments having dropped from 1.7 million a year ago to 1.1 million, the decline is ascribed to the poor economy's chilling effect on video game sales as a whole. Nintendo so far has been the only console maker this generation never to cut its system price to boost sales and has remained firm at $250 since launching in 2006.