Goody. Now that he's off the Other M hate-train (sort of, anyway), he's making sense again.

double

Funny how Malstrom dismisses Apples rise to be the fourth big gaming power in the industry.

iOS style devices already have disruptive potential. They cater to the low end of the gaming demographic, they have a unique distribution model which Nintendo cannot compete with given the differing nature of their respective businesses and they are becoming more important. Last year the iOS gaming revenue exceeded the PSP gaming revenue and that growth YOY is likely to be significant enough to make Apple the clear number two handheld gaming company. The 3DS in many ways can also be seen as a retreat up market against the rise of the iOS devices because it caters more towards the core of the handheld userbase.

"Funny how Malstrom dismisses Apples rise to be the fourth big gaming power in the industry.

iOS style devices already have disruptive potential. They cater to the low end of the gaming demographic, they have a unique distribution model which Nintendo cannot compete with given the differing nature of their respective businesses and they are becoming more important. Last year the iOS gaming revenue exceeded the PSP gaming revenue and that growth YOY is likely to be significant enough to make Apple the clear number two handheld gaming company. The 3DS in many ways can also be seen as a retreat up market against the rise of the iOS devices because it caters more towards the core of the handheld userbase."

He did not claim they couldn't get into gaming at all, just that not being dedicated gaming devices means they won't be the competition everyone thinks they will be.

Cable TV isn't a dedicated sports medium and yet they are the dominant medium for delivering that kind of content. Facebook isn't a dedicated gaming platform at yet it sports the game with a userbase exceeding the Wii. So with iOS devices not being dedicated gaming devices doesn't mean they will also never become an important handheld gaming marketplace.

Important is still not the same as dominant. Plus your TV and sports things doesn't take into account that the competition wasn't a nearly equal medium that was around longer. Movies were not, since they couldn't show them live. Radio couldn't show the picture. And going for real isn't always practical.

The question is if they steal business away, which is very likely to be the case, but the way Apple disrupts and the way Nintendo does are at odds. Apple is simply undercutting business, and it would be extremely difficult for them to move upmarket (though GameCenter is an attempt at that), but in Apple's case its a zero-gain philosophy. It doesn't matter to them if someone who has their product "upgrades" to a DS, 3DS, or PSP. They still have their iOS device, but Nintendo is now in the position of having to do the hard work to get them to upgrade, and in that sense will be fighting the same hard fight that Sony is currently in with Move: trying to convince users that what they have isn't enough.

Apple is fighting no conflict with Nintendo because they have relatively little to gain by preventing their users from buying Nintendo handhelds. The most would be the lost opportunity cost of further iStore games that users might have bought if they hadn't bought a DS, but that's all very speculative

A competitor doesn't need to have >50% market share in order to threaten an incumbant. The smart phone is becoming one of the most significant growth area of the market and seems to be fostering a massive change in computing. The fact that Apple had more revenue in gaming than Sony on a diet of $.99 - 1.99 games is pretty staggering in the handheld space.

1. I didn't claim that had anything to do with this.

2. Okay, disruption is not just a move from one side. It's also leaving room for the other to disrupt. If you don't leave room, you can stop the disruption. Malstrom mentioned that Microsoft used smart tactics with laptops to prevent netbooks from disrupting them. So Sony left room for disruption with all the PSP mistakes (and PS3, assuming you mean Apple made more money than Sony's gaming division). Nintendo is moving foreward with their next handheld, but more importantly, they are focusing on games that will sell this handheld.

Apple's devices are widespread, so by virtue of volume, their revenue is a lot. But they will need some major killer apps to truly make a great handheld gaming device. That could happen, but because Nintendo has their killer apps once again (or always had them with their handhelds), disrupting them is unlikely. Apple at best would make their own handheld market. They don't need to disrupt Nintendo. This is actually what Malstrom's latest post is about. Competition in gaming need not be Zero Sum. You can make your own market without taking on the competion directly.

 Nintendo only has to fear Apple when Apple can put out games that challenge Nintendo software, right now, its not even close, and there is no sign that it will ever be close