This Accessory to Apple's iPhone Could Mean the End of Nintendo

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Logitech (NASDAQ: LOGI  ) unveiled its iPhone controller, the PowerShell, earlier this week. By attaching Logitech's device to Apple's (NASDAQ: AAPL  ) iPhone 5, iPhone 5s, or fifth-generation iPod Touch, consumers can transform their smartphone or mp3 player into a powerful handheld console.

Apple's app store is already a major force in the gaming world, paying millions to game developers every single day. Yet it hasn't cornered the market for handheld gaming totally -- at least not yet. Nintendo's (NASDAQOTH: NTDOY  ) handheld, the 3DS, continues to sell well. But with Apple's iPhone finally getting what it has long lacked -- buttons -- Nintendo's future looks uncertain.

Apple is already more important than Nintendo
When it comes to handheld gaming, Apple is already far more important than Nintendo. In the U.S., there are about 126 million mobile gamers, according to eMarketer, and though Apple's share of the mobile market has declined worldwide, it's still dominant in the U.S., making it likely that the majority of U.S. mobile gamers are playing on some sort of Apple device. In comparison, Nintendo has sold about 35 million 3DS consoles worldwide.

When it comes to money, Apple is ahead there, too. When it announced the iPad Air, Apple noted that over the past four months, it had paid mobile developers $25 million per day. Assuming that downloads hold up, Apple is on pace to pay developers over $9 billion in the next year -- much of that to game creators. In fact, Distimo estimates, via Forbes, that about 79% of app revenue comes from games; Apple could pay game creators over $7 billion next year.

The exact size of the Nintendo 3DS gaming market is less clear, but it's nowhere near $7 billion -- NPD reported that, in October, traditional video game software in total brought in just under $500 million in the United States.

But mobile games haven't appealed to core gamers
Yet despite the popularity of iOS gaming, traditional gamers have stuck to consoles. The most popular mobile titles (Candy Crush, Angry Birds, etc.) are simplistic games aimed at casual gamers. Although they're highly addicting and very profitable for the companies that developed them, they can't replicate the same experience as, say, Nintendo's Pokemon franchise.

But why is that? Largely, it comes down to input. With only a touchscreen to work with, mobile game developers are hamstrung in their ability to offer compelling titles. But Logitech's new device changes that.

If gamers buy Logitech's controller, they'll almost be transforming their iPhone into Nintendo's handheld -- both devices sport two shoulder buttons, four front-facing buttons, and a D-pad. Logitech's device is only missing Nintendo's directional nub.

With the ongoing decline of the traditional PC, Logitech has had to invest in new markets beyond its traditional keyboards and mice. It's turned to gaming accessories as a major area for growth, and there, I would expect the company to do more. A controller for Apple's iPad Air and iPad Mini seems like a natural next step, and could actually prove more compelling from a gaming standpoint as, according to Business Insider, tablet users spend more than two-thirds of their times gaming.

Nintendo is now dependent on handheld gaming
As a company, Nintendo is now very much dependent on the handheld gaming market. Its year-old Wii U has, so far, been an objective failure, missing Nintendo's expectations for sales. Nintendo sells the Wii U at a loss, which has weighed on earnings, and last quarter, caused Nintendo to report an operating loss of about $200 million. Nintendo's management expects the company to have sold 9 million Wii Us by the end of next March, but that won't happen, given that Nintendo sold less than 4 million as of the end of September, and will have to compete against both the PlayStation 4 and Xbox One this holiday season.

Nintendo's 3DS, however, has done quite well. In fact, it's been the best selling console in the U.S. for six months running. The recently released Pokemon X and Pokemon Y were both top sellers in October and should benefit Nintendo come earnings time.

But Nintendo's reliance on handheld gaming is dangerous, and potentially fatal. With Logitech's new controller, Apple's phones could finally get the sorts of the games that attract core gamers. When that happens, the reasons to own Nintendo's handheld will plummet.

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Read/Post Comments (10) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On November 23, 2013, at 4:17 PM, Grendel wrote:

    "...traditional gamers have stuck to consoles."

    That's because the mobile device titles don't even come close to the value of what Nintendo has to offer on the 2DS/3DS. Sorry, but the iOS devices don't stand a chance in the gaming market against Nintendo.

    Angry Birds will never match the game depth and content of a good Nintendo title, and gamers have known this for years.

  • Report this Comment On November 23, 2013, at 4:18 PM, Grendel wrote:

    Also, a thrid-party accessory for an iPhone could mean "the end of Nintendo" ?

    Hyperbole much?

  • Report this Comment On November 23, 2013, at 4:49 PM, jabstrat wrote:

    An off-topic comment .....

    i'm surprised why none of the usual blog sites - Motley, SA, etc. - have anything to say about China Mobile's December 18th "new mobile brand" event, and how it's widely presumed that Apple's iPhones will be launched. Why don't you guys comment on this, which promises to be one of the biggest events for Apple in a long, long time.

    1 -

    2 -

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  • Report this Comment On November 23, 2013, at 6:05 PM, jayMonster wrote:

    This looks like a good idea, it may sound like a smart and reasonable idea, and i can't stand little app games, but I'm not really sure. I'll be honest I'm a fan of the big N and the plumbers. i own a 3ds and a an xl too, I actually ran into this looking for an article on 3d world, and it's an interesting idea, but I don't agree that it's gonna make Nintendo topple over dead.

    1. For one thing this article makes this sound like such a new thing but if everything it says were true Nintendo should have toppled over a year ago. I tried finding out more and instead say that a whole bunch of products like this already exist. on amazon and on you tube I didn't find much about this product but i found that the idea is nothing very new.

    2. There didn't seem to be too many people buying them and not a lot of hype over this Logitech product either. If a product is to be a success people have to know about it. There's a ton of hype for next gen consoles. even the 2ds got a lot of hype, maybe not all of it was good but it got attention, and seems to be doing OK.

    3. Money. Money. Money. Everybody loves making money and getting the best deal. "Hard Core gamers" know that they gotta shell out the cash for the good stuff. Maybe we can download some cool but cheap indie games or buy used or find other ways to save but you get what you pay for. "Casual gamers" are the people on phones who want cheap and quick fixes. If possible totally free, hit play and quit when you want. Download and delete, rinse and repeat. What is my point? I flipped when i saw the $99 price. Are there really a lot of hard core gamers on phones who are gonna shell out almost enough to buy 2 or 3 games. Are casual gamers gonna shell out that money?

    4. If you really are "hard core gamer" looking for something on the go the 2ds is 20 bucks more and has a built in touch screen and an extra bonus top screen that they threw in free of charge, just for you, because they wuv you. There are fun pre installed games, super cheap eshop games and free demos that can easily provide a quick fix, entertain your kid, or please the inner child, just go down to the wifi spot and download to your delight. Or buy a Vita, or a psp, or any old nintendo system. That last one, It's the cool thing to do according to all these college kids, it's retro and very cheap, or something.

    5. This thing is only available to limited amount of people who own certain iphones, with the latest ios. Not all of those people are playing with ticked off birds on the can. The price doesn't help either. I am people, and people like to feel like there getting their moneys worth or better. I am peoples hear me rawrs!

    Wow I ranted.

    I went way off topic, man I just wanted to read about 3d world and then I found this article and made an account because I just really don't agree that Nintendo is gonna keel over dead. Not over wii u or apps with buttons. I actually want to get myself a wii u now, 3d world looks awesome, and maybe a 2ds for my lil' nephew. he may play with the tablets but he can't keep his tiny hands off when I play 3d land. He loves it.

  • Report this Comment On November 23, 2013, at 8:03 PM, NandoLopez wrote:

    Why is every article on this website so heavily slanted against Nintendo? It's mind blowing how much the people who make this website seem to hate Nintendo. I don't understand. Who runs this place? Sony?

  • Report this Comment On November 24, 2013, at 4:14 PM, captAhab02 wrote:

    Microsoft runs this place @ nando.

  • Report this Comment On November 25, 2013, at 1:54 PM, targeyone wrote:

    I'm just laughing.

  • Report this Comment On November 25, 2013, at 2:01 PM, smileyryder wrote:

    @Nando It's because the cool thing to do is to bag on Nintendo, regardless of how well they're actually doing. The company is in good shape. They're still making profit and for the last few months the 3DS has been the best selling console/handheld in the market.

    I think all these "analysts" always forget that gamers want games that are more than Angry Birds or Candy Crush and you can't get those on a phone because the input devices aren't there. There have been a number of different solutions to putting buttons on a phone. Why? Because that's what it takes to make a game control the way people want. Those solutions, including numerous versions of add-on controllers have done NOTHING to topple Nintendo's dominance in the handheld space.

    Nintendo is still the leader and they show no signs of going anywhere anytime soon.

  • Report this Comment On November 25, 2013, at 2:11 PM, lukehug wrote:

    Articles by Sam Mattera;

    - This Accessory to Apple's iPhone Could Mean the End of Nintendo

    - Nintendo's Future Looks Bleak in Light of Wii U Failure

    - Apple Could Put the Final Nail in Nintendo’s Coffin

    - Apple’s Latest Move Could Be Nintendo’s Undoing

    Blimey, give it a rest.

  • Report this Comment On November 26, 2013, at 12:00 AM, element187 wrote:

    Doesn't sound like this author has played any iOS games. If he did, he would know they are shallow, boring and lack any innovation in gameplay mechanics.

    People purchase Nintendo products for the software you can't get anywhere else. Everyone knows the hardware Nintendo puts together is usually fairly weak, but even a top of line PC is pretty worthless if all it had was Candy Crush.

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