First, the Blue Ocean Strategy is a book, not something Nintendo made up. http://www.youtube.com/watch?v=5foJ-cwj4Mk

The tagline of the book is "How to create an uncontested marketspace and make the competition irrelivant." Reggie says that the point is to focus on growth and not trying to one-up the competition. The goal is to sidestep competition and create a new product that gives new values not offered in the industry. The DS added the value of the touch screen which made games easier for those who have never played them and allowed Nintendo make new types of games like Nintendogs.

What you are suggesting is that Nintendo needs to counter Sony, but this is Red Ocean thinking. This is thinking about competition and not growth. Decline and stagnation in markets are created by compeiting on industry standard. Nintendo knows their goal is to grow the market place. They mention this all the time for the DS and Wii. How would the DS2 grow the market? Can they mantain growth if they have to get old DS users to migrate and attract new ones. See how this plan is just impractical to do against just keeping the Ds and making more software. You mentioned Miyamoto said Nintendo is working on a new handheld. Nintendo, like Sony, is always working on a new handheld. Nintendo would never let Miyamoto talk about their next system before it is offically announced as someone could start stealing secrets. Heck, Miyamoto also is aware of this and would never risk it. However, Iwata did tell investors that Nintendo has noticed the DS's declineing sales. He said this:

On to our challenges on the decline of our software shipment in the “Other Regions” including the European market, we acknowledge it as a big issue because, even though the decrease in actual sales in the markets was smaller than the decrease in our shipments (as I said during today’s presentation), the actual sales declined about 20%. Some say it is due to piracy activities made possible by devices such as Magic-Coms(R4), but I don’t believe it’s the only reason. When Nintendo DS was getting more and more popular and sales figure performed accordingly, some of our product proposals became a social phenomena. Just like Brain Training in Japan, Nintendogs or Brain Training did the same thing in the European market. Actually Brain Training performed fine there last year – it sold over a million copies in Europe but the previous year had sold more than three million copies. That means Brain Training had less visibility as a social phenomenon last year. Nintendogs is in a similar situation. If we could propose what will replace them and maintain a high visibility in society, then the Nintendo DS momentum can be activated and more software titles can be sold. What this means is that we were not able to do that. Thus I believe our highest priority is to propose and offer Nintendo DS titles which can be another social phenomena.

Nintendo said their strategy to to offer new DS titles. Their goal is to keep the DS alive.

Now, you mentioned that the GBA was doing well during the DS. however, you have to see the market from Nintendo's prespective from that time. The Gameboy like was shoehored to young kids in the US and Europe and wwasn't doing great in Japan. Reports showed the market was starting to decline and it already had in Japan. Nintendo knew they had to do something, so they used Blue Ocean Strategy to create a new market space and create growth. This is where the DS comes in. Nintendo is conservative, so they wont try some radical plan unless they have a back up. This is why Metroid Fusion came out around Metroid Prime and may be why Galasy 2 is coming out (to help NSMBWii if it failed). So, Nintendo kept the GBA line in case the DS failed, thus the third pillar. The GBA Micro was made in case the DS failed. The DS successded, and all focuses moved to the DS. But you may ask "Why did the Micro come out after the DS's success." Remember that the DS took some time to get warmed up in the US. It was Brain Age that made the DS here (although Nintedogs still did well). Nintendo, at that time, was still hoping the DS made the impact in the west it did in Japan. So, at E3 05, Nintendo announced the Micro. But, again, the DS worked and it was discontinued.

Before I close remember the PSP Go? Remember what Nintendo did in responce. Nothing. The PSP Go was Sony trying for what they though would be a big hit in digital distribution. Nintendo saw no threat and did not respond. When Sony announced the PSP2, Nintendo will not respond. You have to understand that the DS is in a Blue Ocean, and Nintendo will only respond if the PSP2 has the same values as the DS. Right now, they are not in the same market space. Nintendo "Made the competition irrelevant." Their goal is not to compete for the handheld market, and they know they have lost every time they compete on the same values, as has Sega. They will never compete dirrectly with Sony ever again. Heck, the DS is not competing with the PSP, and it's the most successful Nintendo system so far. To counter attack the PSP2 (which, mind you, has not been revealed. Notice how Nintendo is always last to respond?) would be to sacrifice their blue ocean they successfully created and jump back into the red ocean and fight Sony and lose.

It's dumb for Nintendo to release a new handheld and they know it. It's not coming.

I hear where your coming from. However what happens when the DS stops expanding the market? Nintendo is not a stupid company and they do know that Blue Ocean alone won't hold out forever. A DS will not continue selling well after a succesful PSP2 launches. Also how much more can the DS expand the market before something new is needed.

Now you could argue that Blue Ocean is working well and indeed the DS is making cart loads of profit for Nintendo. However for the first time in handheld history the competition is actually succeeding. The PSP is selling millions of hardware where GameGear/NeoGeoPocket only sold thousands a month or less. Then software for the I-Phone/I-Pod Touch is selling like hot cakes. Nintendo is loosing their edge on the market more with the DS then any other handheld in Nintendo's history.

Also not competing with the competition (Avoiding Red Ocean) is impossible when the competition starts using Blue Ocean as well. It was a way for Nintendo to expand its user base and launch a pre-emptive strike. But with Natal and Sony's motion controller and a new PSP on the way, its a fact that Nintendo will have to compete.

Your also wrong Iwata has already started talking about the next handheld denying features that have been suggested and even Miyamoto has talked about the next Wii. Fact is Nintendo is prepparing new hardware and the dillusion of non-competition and constant market growth will not work once all the competitors start expanding into one anothers territory!

In the end Blue Ocean worked but Nintendo will/can not stick to Blue Ocean for ever. You can't say okay the DS is expanding the market so lets just leave it for a decade while the competition provides the market with newer fancier consoles. Also Nintendo handhelds have always had very strong early adapter sales. If Nintendo chooses to launch a new platform they will have no problem doing so. Most DS owners will buy Nintendo's next handheld at launch or shortly after.

Also just to get a word in, The PSPGo was Sony's answer to Nintendo's DSi. The DSi and Lite were answers to Sony's 2000 and 3000 models. Fact is they have been competing with fresh hardware this whole time. If Blue Ocean were really Nintendo's only strategy then why do we have a DS:Lite , DSi etc...etc.... fact is Nintendo is using parts of Blue Ocean and Red Ocean strategies to make their decisions. But they are not strictly Blue Ocean or Red Ocean. They are using what works and are not stupid.

Nintendo has never responded to a PSP release. Nintendo released the Lite in 2006 and released the DSi in 2008. The PSP didn't have new models until 2007. If anything Sony responded to Nintendo, not the other way around.

Again, you don't understand the Blue ocean Strategy and becuase of that, you can not understand Nintendo's strategy with the DS. You keep thinking Nintendo has to compete with Sony becuase Sony is somewhat successful in the handheld business. Of course, what you are advocating is the exact opposite of what Nintendo should do. Nintendo lost every time they competed with Sony. The Wii and DS are successful becuase they avoid direct competition. Nintendo should never compete with Sony.

You underestimate Blue ocean Strategies a lot. You can use them forever. The only time a Blue Ocean Strategy will fail is if someone else opens a new blue ocean (which has not happened yet) or the company gives up on it and competes. Since no one has tried to open up a new blue ocean, Nintendo is best off to stick to their Blue Ocean.

But here is what you don't understand. The point of the Blue Ocean Strategy is to expand the market to users outside of the industry. Example: When Henry Ford made the Model T, he wasn't competing with cars at the time, he was competing with horse and carriages. Cars at the time were luxury vehicles and were used for Sunday drives rather then to get around. The Model T was meant for every man. It was cheap to afford, it was easy to learn how to drive, and it was cheap to repair. This is how America got on the road. Sowthwest Airlines was not competing with traditional airlines. But they were competing with alternative. Flying uis faster, but less economical and less flexable then driving. So Southwest focused on making flights cheaper and with less hassle (things such as transfers and what not). These are blue oceans as they do not follow the industry norm. A DS that would compete would have high end graphics, no touch screen and can play movies and music. The DS has N64 graphics, has a unique touch screen and can not play movies (it can play music with the DSi, but that is a different story).

The reason Nintendo never has to compte is becuase they made a new market. Sony is not competing over the same market space as Nintendo is, so they have no threat. The only threat they do have is people not using their products. They have to keep growing the market and nmake more users. This is where the big money is at.

Nintendo has never responded to a PSP release. Nintendo released the Lite in 2006 and released the DSi in 2008. The PSP didn't have new models until 2007. If anything Sony responded to Nintendo, not the other way around.

Again, you don't understand the Blue ocean Strategy and becuase of that, you can not understand Nintendo's strategy with the DS. You keep thinking Nintendo has to compete with Sony becuase Sony is somewhat successful in the handheld business. Of course, what you are advocating is the exact opposite of what Nintendo should do. Nintendo lost every time they competed with Sony. The Wii and DS are successful becuase they avoid direct competition. Nintendo should never compete with Sony.

You underestimate Blue ocean Strategies a lot. You can use them forever. The only time a Blue Ocean Strategy will fail is if someone else opens a new blue ocean (which has not happened yet) or the company gives up on it and competes. Since no one has tried to open up a new blue ocean, Nintendo is best off to stick to their Blue Ocean.

But here is what you don't understand. The point of the Blue Ocean Strategy is to expand the market to users outside of the industry. Example: When Henry Ford made the Model T, he wasn't competing with cars at the time, he was competing with horse and carriages. Cars at the time were luxury vehicles and were used for Sunday drives rather then to get around. The Model T was meant for every man. It was cheap to afford, it was easy to learn how to drive, and it was cheap to repair. This is how America got on the road. Sowthwest Airlines was not competing with traditional airlines. But they were competing with alternative. Flying uis faster, but less economical and less flexable then driving. So Southwest focused on making flights cheaper and with less hassle (things such as transfers and what not). These are blue oceans as they do not follow the industry norm. A DS that would compete would have high end graphics, no touch screen and can play movies and music. The DS has N64 graphics, has a unique touch screen and can not play movies (it can play music with the DSi, but that is a different story).

The reason Nintendo never has to compte is becuase they made a new market. Sony is not competing over the same market space as Nintendo is, so they have no threat. The only threat they do have is people not using their products. They have to keep growing the market and nmake more users. This is where the big money is at.

Your only saying exactly what I said. Blue Ocean can't work forever. You said yourself it doesn't work if the competition also opens up a new BlueOcean. Microsoft and Sony have both said they will be openning Blue Oceans with Natal and the Wand. Whats to prevent Sony from coming up with something for the next PSP that will expand the market.

Realistically once everyone has a motion controller, once everyone has a touch screen then neither device are Blue Ocean. Instead they become Red Ocean because they are no longer occupying a niche they no longer are expanding the market. They are then competing directly with the competition.

That being said Miyamoto has said that the next Nintendo home console will revolutionalize the industry again. He said Natal and 3D were not big enough features to warrant new hardware he said Nintendo has something even bigger up their sleeves. I'm sorry but this sounds like competition to me.

Once you are competing with Blue Ocean it stops being Blue Ocean. Your example the Model T once all the manufacturers started building every man cars then Model T's were no longer Blue Ocean were they? SouthWest Airlines, once everyone started offering cheaper flights and economy class flights SouthWest was no longer Blue Ocean.

You can't use Blue Ocean for ever, once the competition starts producing Blue Oceans to compete with your Blue Ocean your Blue Ocean stops being a Blue Ocean. Also aren't you alittle concerned that with everyone trying to expand the market at all costs and reach non-gamers that us gamers will be left out. I mean seriously what will happen to gaming as we know it? It will cease to exist because everyone is trying to out do one anothers Blue Oceans.

If Nintendo remains a Blue Ocean company next generation and does not produce comparable hardware to the competition. Then for the first time since I was born I may not buy Nintendo's next console. Infact I can say the same about Microsoft and Sony if all three companies launch Blue Ocean hardware and ditch our controllers then I will be sceptical at buying any next gen platform. Infact I might go PC (Shutters at the thought)!

Anyways I'm pretty sure the next Nintendo system even if it has some new controller will sport HD graphics and compete with the competitions hardware. Just as I expect a new handheld really soon that is high enough quality to compete against PSP2.

Lastly many are saying PSP2 will have a multitouch screen similiar to the I-Phone/Touch and DS. Once that happens DS is no longer Blue Ocean, it isn't offering anything non-gamers will not get from the competition. Essentially the DS will become a direct competitor with PSP2 regardless of what Nintendo chooses to believe. So if Nintendo is to remain Blue Ocean they need to create new hardware that offers non-gamers and gamers alike something new that the competition doesn't.

Also I may not be an expert on Blue Ocean but I do know that when the competition offers every feature you do you are no longer Blue Ocean. I mean seriously the Wii next year is no longer Blue Ocean, come PSP2 the DS will no longer be Blue Ocean. They will be competing whether you or Reggie like it or not!