If Nintendo DS Success Is Any Indication, "Wii" Will Win Market Share

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Includes: KNM, MSFT, NTDOY, SNE
by: Steven Towns

Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

Amid Videogame Arms Race, Nintendo Slows Things Down [Wall Street Journal]

Summary: Nintendo took the simple approach with the design of its Wii game console that goes on sale in the U.S. in less than three weeks. It is technologically inferior by design to Microsoft's Xbox 360 and Sony's forthcoming PlayStation 3. Nintendo chose such a strategy because of the reality that the gaming market was shrinking in Japan, wasn't growing in the U.S., and gamers were increasingly finding games too complicated. The simple approach has paid off huge with its handheld DS console launched in November 2004 that has outsold Sony's more high-tech PlayStation Portable. With the Wii, Nintendo is attempting to satisfy all sorts of gamers, to include casual players that may otherwise have not purchased a new console, due to cost and the complexity of games. NTDOY-MSFT-SNE-1yrchart-110106 The Wii at $250 is cheaper than the entry level models of the Xbox 360 at $299, and the PS3 at $499. And its innovative remote control-like game controller and "fun" games such as sports games where the controller can be used as a tennis racket for instance, in addition to classic games like Zelda, are seen attracting a wider audience. Nintendo may not have the market share Sony's gained from its PlayStations, but it is profitable and expects its Wii to be profitable within a year.
Related links: IRG: Nintendo FQ2 Earnings Summary (scroll-down) • Nintendo's Strategy Significant for its Business and the Video Game IndustrySony Comments on LCD TVs and PSP Shipments • Reuters: Nintendo picks GameStop, Toys "R" Us for Wii launch • BusinessWeek: Nintendo Brings the Games to the PeopleThe Growing Importance of Online Gaming for Nextgen ConsolesMicrosoft: "The Younger Audience Is Our Future"Who Will Profit From the Gaming Console Wars?Nintendo: Solid Business, Share Price Too High
Potentially impacted stocks and ETFs: Nintendo (OTCPK:NTDOY), Microsoft (NASDAQ:MSFT), Sony (NYSE:SNE), Activision (NASDAQ:ATVI), Electronic Arts (ERTS), Konami (NYSE:KNM), Take Two (NASDAQ:TTWO), THQ (THQI)

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