Last week, Nintendo posted its first quarterly loss in two years. Specifically, Nintendo lost 25 billion Yen from April to June, or about $288 million for the quarter. Though sales of the Wii have cooled off, the surprisingly dismal earnings from Nintendo are largely being attributed to slumping sales of the Nintendo DS, which saw sales plummet by nearly 50% during the quarter gone by. Year over year, DS sales are down 33%.
While portable handheld sales are indeed down across the board, the one company seemingly unaffected by this downturn is Apple, who recently reported that iPod Touch sales were up 48% during the most recent quarter as measured against the same quarter a year-ago.
While it’s easy to peg the decline of the DS with the continuous rise of the iPod Touch, there are some other factors to consider before jumping to such conclusions. For example, it might be possible that folks are holding off on current DS purchases because they’re waiting for the recently unveiled Nintendo 3DS to come out, a gaming platform that promises a 3D gaming experience without the need for special glasses. The 3DS is on schedule to launch in the first quarter of 2011.
Another factor, according to Nintendo, may have been the relative lack of new titles during the quarter gone by which saw only 168 new game releases compared to 278 during the same quarter a year-ago..
But don’t be fooled by excuses delivered to appease investors and analysts. Nintendo is well aware of the threat posed by Apple. Nintendo President and CEO Satoru Iwata recently declared that Nintendo’s next big battle would be a showdown with Apple.
To be sure, the Nintendo DS and Sony PSP are both solid devices, but it’s becoming abundantly clear that the day of the dedicated gaming device is coming to an end as multipurpose devices like the iPod Touch continue to gain traction.