Smashchu2 said:
That's not even 1/4th of the market. How can we say that Apple is a threat? They obviously do not have anywhere near the strength to effect Nintendo. A few other misnomers. The distribution is not really "more profitable." What it really has is higher margins (Difference bewteen the slaes price and it's unit cost). Profitability is the end result. Let me take two products (and we'll say they are both softare titles on two diferent platforms) and show you how one is more profitable)
See how A, despiting having a weaker margin, would generate more revenue. This is because it has a higher potential to sell better. Game C was to show that higher price can mean better margin. The most the margin for A could be was $5 (this is with no cost). The most the Margin of product B and C could be is $40. There is a lot more wiggle room. Because the price is higher, it can meant the margin can be higher as well. Now, look at this.
Notice how iPhone has far more games. They have asmaller peice of the pie and it is spread across more games. This means they they are not a real gthreat to Nintendo as making a game on a Nintendo system has a higher chance of yeilding better profits. The 19% is more from shear bulk them from compeling software. So I still say that Apple is no threat to Nintendo. |
You're not understanding the bigger picture at least in my opinion anyway. 
The iPhone has a completely different business model to the DS which is why the device could be disruptive to Nintendo and which is why Nintendo pre-emptively defended themselves from it with the 3DS.
A 3DS game which is $40 has what? 20% retailer margins? Thats $32 to the publisher whom probably has costs of $6 to make/distribute the cartridge. Nintendo probably gets $6 and thats pretty much the best case scenario because if they have to discount it skews their profitability model even further. So the total margins as I figure roughly are $18/20 etc. Whereas an iPhone game could cost $15 in the store and the publisher margins are $12 because Apple only takes a 30% cut for everything. This means they can price their games lower, don't have to worry about distribution costs and take very little risk because aside from making the game all the costs are variable costs. They can sell many more games at $15 than they can at $40 but the margins for each game are closer because of the distribution models efficiency.
Nintendo cannot support a direct download model because their business model is mainly retail so they cannot continue to offer the same games for a lower price online as it would irk the retailers whom sell their games. The reason why there are so many iPhone games is that the cost of entry is much lower and it is a free(er) market compared to Nintendo whom hold their dev kits close to their chest. Also most of the games are very cheap $5-50,000 which is very easy to recoup on the app market.
The issue is that the iPhone is 'good enough' to be a game system. Its not able to take over the entirety of the market at first but just like GPS units the iPhone and similar are slowly moving into direct competition with Nintendo.
Tease.
