Monday, May 11, 2009

Nintendo to reveal Wii 2 soon, analyst believes

In an online article, English newspaper The Times speculates that Nintendo may soon have to detail plans for a successor to their current home console, for Wii 2, if you will.

The reason cited by the author is economic pressure, a highly controversial stance. Although market leader and clearly the most profitable of the three hardware manufacturers, Nintendo stock has also been affected by the economic crisis, the author notes.

Speculation over Nintendo’s development of a Wii 2 console has intensified as the company’s stock has crumpled and the industry approaches the closely watched E3 trade show in Los Angeles next month.

In a shock to the markets yesterday, Nintendo reported that its profits in 2008 were the strongest on record but said that it would struggle to repeat the performance as sales of its two main consoles — the Wii and the DS — level off and foreign exchange turmoil destroys margins.

The author is clearly very critical of the Wii console. The headline "Nintendo admits Wii is close to its ultimate level" appears to be a gross exaggeration of the assertion below that "the company believes that sales of the Wii console will grow by less than 1 per cent this year from the 26 million units last year and gave warning of a 3 per cent decline in sales of the DS from last year’s 31 million." Likewise, the article's assessment of Nintendo's line-up is a sober one.

The once seemingly boundless possibilities offered by the Wii’s innovative control system appear to be reaching their limits and the console is beginning to look underpowered compared with the Microsoft Xbox 360 and Sony’s PlayStation3.

Hiroshi Kamide, of KBC Securities in Tokyo, said the weak-looking pipeline of Wii titles meant there would be a lot of attention on the next instalment of the Zelda games and when it was likely to be released. The series has produced a string of blockbusters for Nintendo and the announcement that the latest instalment may be in the shops by Christmas could be the “killer application” that Wii needs.

Nintendo's economic standing is unclear, at best. While news agency AFP reports that "Nintendo defies recession with record profits", Reuters reports that "Nintendo sees slowdown ahead". The company's shares really have slipped significantly. But it is important to understand that the share price had pretty much quadrupled in the period before. So, I guess, it all depends on whether Nintendo can continue to offer compelling software which will drive hardware sales further.

Also, the author is clearly highly critical of Nintendo. As mentioned above, the headline "Nintendo admits Wii is close to its ultimate level" is a bold interpretation of figures only. The company's most recent financial statement contains no assertion to the effect suggested by the headline. While the numbers are correct, the article also notes that Nintendo "is known for issuing hyper-conservative forecasts, only to exceed them triumphantly later in the year." This is a contradiction in terms.

But what about the article's reference to a Wii successor? In my mind, this argument is completely ridiculous. The hardware manufacturer under the most pressure is Sony, without a doubt. They went from "first to worst", as some analysts had predicted. The entire corporation is in a desperate financial situation and reliable rumours about a revised PlayStation Portable which will do away with Sony's proprietary UMD medium are a clear sign of that. If anyone is under pressure to announce a successor console, it's Sony. And they quite obviously will not, although a successor must already be under way.

With the PlayStation3, Sony may be committed to a ten year life cycle. But Microsoft will clearly pull a successor to its Xbox360 out of the hat before 2012 by the latest. The same goes for Nintendo. And if the PS3 isn't selling now, why should it be selling in three years time, when there will be two next-gen consoles out, which are both sure to surpass the PS3 in either hardware power or controller scheme or both.

On top of that, the argument is flawed in itself, I believe. How would annoucing a successor help any company sell their current product? If anything, consumers might hold off on buying the current model.

So, to sum things up, my predictions for E3 announcements are clear: no new consoles will be announced. Instead, there will be plenty of new peripherals shown for all three competitors. While Microsoft is highly likely to reduce their console's price tag further, Nintendo will not because they are still selling extremely well and Sony will not because the company's boss Stringer finally wants to see a meagre profit from his multi-billion investment.

If you are wondering, though, what a Wii 2 might look like, check out this neat mock-up.

Source: The Times
Thanks to: MaxConsole

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