What I think is most impactful isn't either strategy on its own. It's the combination of the two strategies which chip away at wii marketshare from either side. I'm not sure which one will be more viable in the long run, but I am more certain that this will serve to "contain" the wii expansion and movement upstream. Nintendo has never done well against the other two when it comes to core vs core (before this gen) and Nintendo pretty much confirmed their desire to re-enter the traditional core market (traditional gameplay ala platforming style) and Sony will be there now with Move and several traditional core games.

At the same time MS is going to start taking away expanded market customers such as the aerobics/dance/movement type games. I disagree with smashchu about what he refers to as the casual fallacy in relation to kinect. The games look like they have quality, and we have to keep in mind that they are launch games. Wii's only really polished quality game on release was wii sports. Kinect has a similar game launching, but with a new way to play. So, for those people that have their acupuncture yoga mats and those that want to be able to hold weights and have accurate body readings, as well as those people who simply want a more compact,elegant solution to having several peripherals laying around and some of the cool functionality such as gesture controlled tv, movies, and stuff like ESPN and video chat for a price that rivals the wii price, it SEEMS like a perfect match. To me, Kinect represents the freedom that I feel the average consumer is not only ready for, but desires. Look at the consumer move to multifunction devices. The move isn't about how cool multifunction is, but how nice it is to have fewer things, to have a combination between minimal substance and maximum capability.

The only one small, probably insignificant, problem is that with kinect people will want to hold something and I just really hope that kids don't start picking up an actual bat  to play baseball.

 In terms of motivation for Nintendo, the question is whether they actually believed the Wii would disrupt the market or not. They didn't seem to understand the market at launch, they were going to offer the Wii at $199 without Wii Sports and they only increased it to $249 when they found out the launch price of the PS3. Their actions support the concept of going to as of yet uncharted waters 'Blue Ocean' but as for disruption it doesn't seem that they read the market correctly at all. Had they done so ahead of time they would have anticipated demand at their price point better and likely launched at $299 and at the same time produced a console which could go much further up-market within the timescale of a single console generation. If the Nintendo WIi is truly disruptive then it would be impossible for Sony and Microsoft to not only halt but force their market share backwards whilst growing their own.

As an aside, funnily enough Apple seems to be the better disrupter at this point. From what I can tell they are disrupting the portable music market, music distribution, standalone GPS units, traditional handheld gaming and the personal computer with various products from iTunes to iPod to iPhone to iPad and iTouch. To this end the 3DS seems like a retreat up-market against Apple because its focusing on the core customer and focusing on capabilities that cannot be replicated on a phone. Whilst at the same time, Apple can sell games which would normally cost $30 on the DS for between $0 and $15 so not only are they targeting the distribution model, they are also targetting the extreme low end of the handheld games market. So if the 3DS comes with 3G, it will be because Apple forced them to put it there.

Completely agree.

Previously, DS was a great disruptor because of the interesting functions it had and applications it provided. It was disrupting the digital language-translation market (Many Japanese use handheld Japanese-English dictionaries, and a large portion of it got soaked up by the DS because these dictionaries are 400-800-1200$), it disrupted tutorial markets like recipe books,  sudoku, puzzles, etc, and it disrupted self help industry with things like brain training, weight lifting tool guides, and had other things like schedulers and planners etc etc, as well as provide some really great gaming opportunities.

The new 3DS barely brings anything to the table. What about it is so different from the DSi? 3D, Graphx, visuals. Things things are described as being Red Ocean strategies yet some people describe them as somehow being disruptive, to a market which the same people saying is dying. It's really baffling, honestly. And yeah we agree that Apple is doing a very good job disrupting several markets. Also helps that they have a ravenous fanbase.

I think Nintendo are at a loss as well, but Christensen, the disruption god, has said that nobody has been able to sustain disruption. I think that is what we are seeing with Nintendo at this point in the game. I think something that has been left out previously, is that one of the factors for a disrupting product is one that pushes a market that the competition CANNOT enter. It's not that they don't want to enter it as opposed to entering it will only take away their profits, in the example of the ipod, Sony could not enter because it would spell ruin for labels and CD sales, a trend we currently are seeing in a big way. In many of cases presented by Christensen, it works, but with the Wii it doesn't. The competition IS following and challenging and at very little risk. They're just peripherals through and through. Sure they spent a lot of money on them, but really how much do you think Sony and MS will be hurt by it? The answer is "not that much". They will make back a very good portion of the investment with the early adopters and fanatics and if they fail, they are still and always will be, optional.

:P

lol looks like theprof has done all the hard work for me, no need for my extra input now

Sustaining disruption is equivalent to a champ in boxing who has all three world titles and is defending his reign for the 8th time.

It is always easier and more advantageous to be the upcomer looking to knock the top dog off his perch. Much more difficult and complex is taking the position of the top dog and sustaining it for a long period because your past exploits are lauded and set the mark, you are the driver in the market, and every product you put out is highly scrutinized in comparison to the products which put you on top in the first place.

Nintendo is feeling the heat. The best thing they can do is let the 3DS drive their profits in 2011 and aim to end this console generation as quickly as possible with a Wii 1.5 or Wii 2. Preferably the latter because their main competitor, Sony, would not  want to release a successor to the PS3 in 2012 or 2013. I'm guessing 2014 at the latest making this the longest generation of video games ever at 9 years.

The perfect way to disrupt both Sony and Microsoft, more Sony, is for Nintendo at 2011 E3 to announce the successor to the Wii sometime in the next 2 years leaving the release date intentionally vague. The PS3 over the last year has just become profitable and an announcement from Nintendo after the 3DS has launched would not only deflate a lot of the air in their sails but knock off a few legs of Sony's profitability stool by forcing Sony to create a PS4 before they want to, otherwise leave them in the same position they were with the PS3 where they launch 2 years after the start and find themselves in another Red Ocean after Nintendo and Microsoft have gobbled up a lot of the Americas market consumers.

Good points both of you, but about Squilliam's OP, IMVHO Sony must push Move hard since the beginning because it comes late enough to make further waiting unadvisable. But additional controllers should cost less, a Move ice cream shouldn't cost more than a WiiMote, who comes last must be competitive. And Sony should cut $50 from entry level PS3 price, so that applying a reasonable saving compared to buying the parts separately, the entry level Move bundle could cost $330 or less, like many PS3 plus game bundles.

When you say Kinect is not disruptive you list Nintendo's disruptive device as being easier to play (and enjoyable) by a wide audience of people. You say that the values of Kinect are similar to that of the wii, and therefore not disruptive. I question that value set. I don't know what line of reasoning you're using, but it is not a doctrine of disruption that the value sets have to be different. Take for example the postal market. First there was the United States Postal Service, then there was UPS, which offered things like tracking of your packages, 2 day delivery, and confirmation signatures. Then came FED-EX, who's product Clayton Christensen uses as an example of top-down disruption using a niche product aimed at the top premium consumer to move downstream into the other markets. Both UPS and FEDEX had the same values. High precision, high speed package delivery.

No, you are looking at this the wrong way.

The US Postal service and UPS were different. Kinect and Wii are very similar in terms of values, or at least in what they are trying to do. Disruption is about doing it differently. In that alone, Kinect is not disruptive.

You are looking at this wrong.If there was no Wii and Microsoft decided to make Kinect, then you would be right. However, the Wii exist, so you are wrong. Also, Kinect is not disrupting anything, so it would not fit in to the strategy.

However, in accord with your distinction, FED-EX was not an incumbent when it came out. However, Nintendo is. I'm wondering if you are confusing the word incumbent for market leader, because Christensen makes it perfectly clear that it is the market leaders that are most susceptible to disruption, since they all have a lot invested in their product and all applications of it.

No, the US postal service was the incunbent and UPS disrupted them, much like Microsoft is the incumbent and Nintendo disrupted them. We bare pst the first stage of disruption.

At the moment, Nintendo is the market leader and like it or not, they make most of their money on hardware peripherals and their near total exclusivity on games reinforces peripheral sales. Their competitors are targetting 2 demographics that are on the overlapping periphery of Nintendo gamers, and the ones that bring in the least amount of sales. Sony is focusing on the hardcore, and MS is focusing on the super casual. Markets like these develop from consumers who use a product but wish there was a better alternative to the product.

Nintendo is still the disruptor. You don't understand the difference. An Incumbent is the leader in the mainstream market, and compete on sustaining invovations, which Microsoft does. Nintendo is the disruptor because it brought in the disruptive innovation. Nintendo wouldn't be the incumbent until Microsoft and Sony are gone (and they will be gone) and Nintendo is the standard for the industry.

This video explains the relation. Nintendo is the incumbent when Microsoft and Sony are pushed out of the market.

Also, I'd like you to consider your description of Sony and MS as incumbents. It has been said countless times by all sides that they are in different markets. Now, Christensen specifically uses Sony in a number of cases in which they were disruptive as examples. However, they were already a company at that point, but they moved INTO another market with disruption. In this specific case, Sony and MS are not part of the motion control/casual market, they are not incumbents, and they are moving into the market on the periphery. MS moreso than Sony. Sony's Move seems like more of a red ocean strategy, but could be top down disruption since they appear to be "introducing" a new element into the casual market. To contradict what I posted yesterday, kinect does not seem to be in the same market, rather it appears to be in an overlapping market of Nintendo's market and a new market.

This is misdefining the incumbent. The incumbent controls the mainstream market. This market would be video games. There is NOT a serperate motion control market. Your definition of the market is too small.

Just consider what you are saying. Kinect is made to stop Nintendo from expanding upstream where its core consumers are. Who are 360's core owners? Halo gamers, FPS gamers, XBL users, Action and roleplaying gamers. Nintendo is not even close to MS's core gamers. They would have to completely change the system to move that far upstream. MS, rather, is the one that is moving, and it is moving downstream to occupy a market that even Nintendo is not a core part of. I know one of the key ways that red ocean is identified is using the term "better" rather than "different". Kinect does seem in some ways to be a "better" casual device, but it's easy to see that it is really a different device. MS is courting the people that don't even want to hold a controller, or stand on a board to do yoga. Plus, the camera has many other useful functions, like the news about being able to read sign-language.

Your mindset would the same as bed executives. Nintendo will make motion control better to cut up market and take Sony and Microsoft's markets.

Again, Microsoft is the INCUMBENT. They are not the disruptor. Please read this. Christensen rights how the incumbents respond. This is a response from the incumbent. That is what this is. You can also tell this because Microsoft had no interest in the Wii's market until recently, now they are ALL about the Wii. Seems a little strange huh?

Also, the 3DS is disrupting Sony's 3D business. In this case, Sony is the incumbent. Which is strange because I like 3D and wouldn't consider the 3DS a crappy product. It may be somehow disrupting the 3DTV market, but Sony is not the leader in the market like I said in another thread. Everyone seems to think that Sony is the one being disrupted because they are updating the ps3 to work with 3D, for free. It is so incorrect to think the 3DS is disrupting the PS3, if that is indeed what you think. The only thing it will be disrupting is the 3Dtv market, and not specifically Sony. Sony isn't even that heavily invested in one aspect of 3D tech. Didn't you see its cylindrical display that shows 3D without glasses in every direction? That's even better than 3DS tech. Additionally a 3D tv can allow several people to watch the same thing as long as they have glasses. The 3DS is only viewable by one person at a time. I'm not arguing the facts with you here, but I am really on the fence about what 3DS is actually disrupting. Would you kindly post a link from malstrom or christensen on the issue?

This is you not understanding disruption. Nintendo wants Sony out. Shouldn't that be obvious? Sony is putting all their eggs into the 3D basket, and Nintendo plans to dump it. This is a business move.

Now please, if you are going to use disruption, learn it right. You read one article and tried to apply it to Microsoft as best you could. It makes no sense. You people need to read more Malstrom.

They wouldn't be sure to fool anyone with that tactic. If they announced the Wii 2 there would be a firestorm of speculation and the truth would come out within 3 months as to how far along their console actually was. You can't pull the wool over the eyes of people who are doing the same thing as you are. This industry isn't THAT good at keeping secrets.

@theprof00: What you said is mind boggeling wrong. You are getting the basic definitions wrong. I'll go though it real quick and maybe you'll understand.

Incumbent: Leader of the mainstream market (the normal market, the one before a disruptor entered). They would be who is being disrupted. They specilize in sustaining innovation

Disruptor: Leaders in the new market (but can enter though the existing market, like Wal-Mart did). They work differently, usually cheaper, more customizable, or more convinient. They weild the disruptive innovation.

Question 1: Can the disruptor become the incumbant. Answer: Only when the incumbant is removed from the market, and the disruption becomes the norm. So, if you think Nintendo is an incumbant, no, you are wrong.

NOTE: In order to have disruption, you must have overshooting.

Overshooting: Overshooting is when the sustaining innovations go beyond what customers can absorb. This usually happens when sales are stagnant. A disruptor is bound to enter when overshooiting happens.

Question 2: Can Microsoft be disrupting Nintendo. Answer: No. Nintendo has to be overshooting the market in order to have a disruptor. Since there is no overshooting, there is no disruption. Also, Microsoft is an incumbant. What they are doing is responding to Nintendo.

Top Down disruption: This is a disruption that starts at the highest teir, and then moves down usually by being cheaper or more assesable. These disruptions are less common, and are always betten by a bottom-top disruption.

Question 3: If Microsoft were disrupting Nintendo, would they win. Answer: Not if they are going top down like has been claimed. A bottom top will always beat it out.

Upstreaming: When a disruptor enters, the incumbents will happily cede the market. This is called Upstreaming. Upstreaming always feels good at first, but it will be the end of the company.

Question 4: Will the upstream forever? Answer: No. The incumbants will respond. There are three responses

1. Growth driven co-option: The incumbant jumps into the new market and tried to capitilize on the growth. Natal is this since it tries to be like the Wii as much as it can
2. Defensive co-option: The incumbant tries to stop the disruption from impacting it's higher tier markets. It's the disruptiong for their bnest customers.
3. Cede the market

"What indicates an attempt at co-option? One sign is an effort by incumbents to develop products or services that mimic the entrant's offering. Acquiring and attempting to integrate one of the class of disruptive entrants is a clear signal that the incumbent is attempting co-option. When business model or process asymmetries don't exist, co-option becomes a viable incumbent response strategy."

Question 5: Can this work. Answer: Yes, if the disruptor does not have the asymetric skill and motivation, the incumbants will beat out the disruptor.

Asymetric Motivation (sheild): This is the motivation which allows the disruptor to be gaurded from counter attacks. Without it, the incumbant will absord the disruptor

Asymetric Skill (sword): the ability of the disruptor to move upmarket. This allows them to take the best markets from the incumbant

Question 6: Does Nintendo have these? Yes. Nintendo's sheild is that they wish to expand gaming (which neither Microsoft nor Sony want to do. Otherwise, they wouldn't have made their machines 400$ and 600$). Their skill is that they are an integrated hardware and software company, so they make the hardware for the software. Sony and Microsoft are not (don't even try to say they are).

How can you tell if combatants have asymmetric skills? Make a list of the tasks the company has repeatedly addressed, for which formal and informal processes have likely coalesced. Compare the list to the nature of tasks required to succeed in the disruptive market. If a company's processes facilitate its doing what it needs to get done in a market context, it has the requisite skills to take that market. Companies all have strengths and weaknesses. When one firm has strengths in markets in which another firm's capabilities are weaknesses, the firms have asymmetric skills.

NOTE: If the disruptor has both of these, they will win.

Question 7: What happens to Sony and Microsoft then!? They will be OK right. Answer: To quote Christensen "The end can come swiftly and can appear stunning to the untrained eye. Typically, the best an incumbent can do is to belatedly acquire the winning firm and stave off ultimate destruction."

There you go. This can all be read here, and I suggest you read it before trying to argue the topic. You sound like a fool otherwise.