Nintendo Admits iPhone a Rival

Nintendo recently revealed its 3rd quarter financial earnings, reporting DS/DSi platform sales of 5.97 million handhelds, falling nearly a million short compared to its 2008 Q3 results. While the DS platform sales rose in Japan, it dropped globally for the usually well-performing company. A rising yen and a shrinking market of potential buyers in territories are considered contributing causes, but Nintendo thinks there’s also a competitor to blame, and for once, it isn’t Sony.

Nintendo’s legacy rivals in the gaming hardware market have traditionally been Sony and Microsoft. Sony is Nintendo’s primary mobile competitor with its Playstation Portable system aimed squarely in the same dedicated handheld gaming space. That all changed in a recent conference call, however, as Nintendo stated that the iPhone was a principle competing cause for the decline in sales, not the PSP. Not only was the iPhone a current cause, but it could also go on to inflict more damage in the foreseeable future. This is the first time in Nintendo’s history where the company has admitted to competition from Apple.

As Apple’s iPhone continues to grow in market penetration, Nintendo has little choice other than to recognize Apple’s foray into the mobile market. While not directly marketed as a game system, the iPhone has proven itself a capable competitor. Apple’s Q3 iPhone sales were 5.208 million, upping the install base of iPhone/iPod Touch devices to a grand total of 45 million. That’s a 736% increase over Q3 2008, and a remarkable achievement for a device many predicted wouldn’t continue sales trends found in previous years.

The DS, in contrast, has a much more substantial install base, with an estimated 107.75 million as of June 2009, but it has also been on the market three years longer than the iPhone. Nintendo’s most recent iteration of the DS, the DSi, was released in November 2008 in Japan and April 2009 in the US. It has the ability to download software (both applications and games) directly from Nintendo’s DSiWare Store, a feature which many thought was in response to Apple’s launch of the App Store. The DSi’s sales have reached an estimated 2.02 million globally as of March 20, 2009.

With more and more developers being courted to Apple’s platform, software selection is growing, potentially enticing more buyers who may be purchasing mobile devices based on software availability. Large game publishers such as Capcom, Namco and Sega are all producing versions of their largest selling franchises for the iPhone, some of which have yet to see versions for the DS. Although Nintendo has tried to market the DSi’s online software store as a defining feature of the platform, the store has less than 100 applications and games available. Apple’s App Store has over 65,000 currently.

Despite Nintendo’s many previous statements that its DS platform is not in competition with the iPhone, Nintendo seems to be finally coming to terms with reality: Apple’s iPhone is a legitimate competitor for handheld gaming dollars.