Why Nintendo's "New" 3DS Is a Confusing, Colossal Mistake

Nintendo (NASDAQOTH: NTDOY  ) just announced two new versions of its 3DS handheld video game consoles, simply called the "new" 3DS and "new" 3DS XL (known as LL in Japan).

This isn't a new strategy for Nintendo. The 3DS family is already split into three lines: the 2DS ($130), the 3DS ($170), and the 3DS XL ($200). The key differences between the systems are that the 2DS lacks a stereoscopic screen and can't be folded, while the XL has larger screens than the other models. But what makes the "new" 3DS and XL novel is that it is the first time Nintendo has significantly modified the internal hardware and controller.

Source: Nintendo.

The new models will have a second right analog stick and two new Z1 and Z2 shoulder buttons. The devices will also sport a faster CPU, built-in support for near field communication (NFC) devices and Amiibo figurines, and have clearer stereoscopic 3D. Both models will also feature removable cover plates, which will cost about 1000 yen ($9.60) each in Japan. Prices and availability for the cover plates have been not announced for other markets yet.

The new versions will launch in Japan in October for roughly the same price as the current 3DS and XL/LL models. Eurogamer and Gamespot have reported that the new models should launch in the U.S. and Europe in 2015.

A foolish effort to save the 3DS
Nintendo is clearly trying to keep gamers interested in the 3DS, which has sold 44.1 million units worldwide. Although those numbers are impressive, sales are peaking -- for the last quarter, Nintendo reported that 3DS unit sales fell 43% year over year to 820,000 units.

This means the 3DS won't likely match sales of the Nintendo DS, which was the No. 2 best-selling console in history, with sales of 154 million units. Combine that with the disruptive threat of the mobile gaming market -- which research firm Gartner expects to nearly double in revenue from $13.2 billion in 2013 to $22 billion in 2015 -- and it's clear Nintendo had to do something to keep its portable games market alive.

Unfortunately, the new 3DS and XL won't save the 3DS family. Instead, I believe the new handhelds will simply confuse new customers while alienating old fans.

A product of old-school modular thinking
To understand why Nintendo incrementally upgraded the 3DS, we need to understand Nintendo's tradition of upgrading existing hardware with modular (bolt-on) improvements.

During Nintendo's golden age of 8-bit NES and 16-bit SNES games, publishers sometimes added special chips into the cartridges to add graphics and audio functions that were not natively built into the console. A well-known example is Nintendo's Star Fox, which used the "Super FX" chip to help the Super NES render simple polygons. This strategy continued with the Nintendo 64's Expansion Pak, which doubled the amount of RAM so the console could play games such as Perfect Dark, Donkey Kong 64, and The Legend of Zelda: Majora's Mask.

Nintendo's Super FX chip (L) and N64 Expansion Pak (R). Source: Wikimedia Commons.

This strategy had two problems. Either the publisher shouldered additional costs by adding new chips to its cartridges, or the consumer had to upgrade the console simply to play a new game.

That's where we are with the "new" 3DS, which Nintendo is essentially upgrading like a Nintendo 64 with an Expansion Pak. The problem is that existing 3DS owners can't simply upgrade their systems with a modular attachment this time -- they have to buy a brand-new 3DS to keep pace.

Alienating core 3DS gamers with exclusive games
If Nintendo had simply upgraded the stereoscopic 3D and processor for the new version, it could have attracted new customers while keeping existing users happy, since the entire 3DS family would continue playing the same games.

But Nintendo instead suddenly added two new buttons and a second stick, and promised exclusive games for the "new" 3DS, such as a port of the Wii game Xenoblade Chronicles. Capcom's Monster Hunter 4 and Square Enix's Final Fantasy Explorers will also use the second stick, although both games will still work with the original 3DS controls.

Xenoblade Chronicles. Source: Wikimedia Commons.

This strategy splits the 3DS user base, with three older systems and two newer ones. Additional exclusive games would basically turn the "new" 3DS into a fully new console, which can confuse new customers and alienate those who purchased one of the previous three versions. This also make it hard for 3DS publishers, which must now decide whether to make a game for the older 3DS user base, or to use the "new" 3DS' hardware to develop a more impressive game.

Nintendo's approach also deviates from the industry standard of slimming existing handhelds with cheaper hardware while keeping the user base in one piece. Nintendo split the original Game Boy Advance into two lines -- the SP, which had a smaller form factor and brighter backlight, and the tiny Micro. Neither model received exclusive games that the original model could not play.

A Foolish final word
Nintendo's abrupt introduction of the "new" 3DS shows that it has forgotten why the handheld console was such a hit in the first place -- a solid selection of games, a stereoscopic screen, and a low price. That's why the 3DS handily outsold Sony's (NYSE: SNE  ) pricier and more powerful PS Vita, which has only sold 8.8 million units since launching in December 2011.

Unfortunately, Nintendo is getting ready to irreparably fragment its 3DS market in a way that it has never done before -- and it could prematurely kill off its biggest user base in the process.

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Read/Post Comments (20) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 04, 2014, at 11:54 AM, SNYPE wrote:

    Nintendo has only announced one exclusive game for the new hardware and that is because the old hardware wasn't powerful enough to play it.

    You aren't going to add a beefier CPU/GPU onto a tiny 3DS cartridge, to make this game there was no other alternative than to make a new iteration of the hardware.

    The other games listed merely use a second analog stick, which likely will work the same way with the old 3ds with a circle pad pro attached.

    They haven't segmented anything. This is no different than when they announced the DSi and had a couple DSi exclusive games that had to use the camera.

    Once again you seem to be baselessly hating on Nintendo. I wonder how much Microsoft pays to keep you guys afloat.

  • Report this Comment On September 04, 2014, at 12:09 PM, CriticKitten wrote:

    This is more like the introduction of Gameboy Color than anything else. It's a significant improvement to the strength of the hardware, while retaining all of the existing functionality and even expanding on it.

    The 3DS was never going to obtain the sort of "perfect storm" market penetration that the original DS got. The DS effectively became the replacement to the Gameboy lineage, and the start of a new generation of Nintendo handheld products. The 3DS could never hope to match that on its own.

    Though I gotta admit, it's hilarious to watch you try to make the 3DS's situation sound so awful when it holds over 80% of the handheld market. But hey, anything to distract the gaming public from the news that Japan wasn't the savior that the Xbox One's biggest fans thought it was gonna be, huh? Keep taking in those checks from Microsoft, Motley.

  • Report this Comment On September 04, 2014, at 12:12 PM, laethyn wrote:

    Another Nintendo doom and gloom article from The Fool. Say it ain't so! I'm shocked. SHOCKED I tell you!

  • Report this Comment On September 04, 2014, at 12:29 PM, Dan91x wrote:

    Save the 3DS? Why would you need to "SAVE" the #1 best selling game system in the world right now? And why is this guy complaining about the "N3Ds" when everyone is excited for it because it shows how nintendo is listening to it's fans? It adds better 3D veiwing angles, a second analog nub, new rz, lz buttons, better cameras beter cpu and a lot of other features people have been asking for without excluding those who currently own the current 3Ds'... And I say that because most likely the N3Ds specific games will most likely be Download only and only veiwable from the N3Ds system... So unless you have that system you'll likely never even know your missing out on anything. Same as if you own any of the 70 bazillion different iphone or android modles which come out monthly and no one seems to mind paying $600 each time on...

  • Report this Comment On September 04, 2014, at 1:23 PM, BHGamer wrote:

    I agree with a lot of the article, but I think there's one MASSIVE point you are missing. That point is that Nintendo fans (specifically handhelds) historically are known to buy the same systems over and over again. That's just fact. How many people bought GBA, the GBA SP front lit, and then a GBA BL, when the thing should've been front lit or back lit to begin with. MANY people. Same with Gameboy color and pockets, they should have been color pockets to begin with, not two separate systems, and then the DS, DS Lite, DSi and DSi XL, it should've been the lite to begin with and if needed upgraded, DSi XL to being with, not 4 different systems, but people still bought the same thing over and over again. So I can see Nintendo's strategy here when the same consumer is just going to buy the system again because that's historically what they have done.

    I've known multiple people that have bought their kids multiple Nintendo systems just for color alone. Ridiculous.

  • Report this Comment On September 04, 2014, at 1:34 PM, murderousjohnny wrote:

    To the foolish writer. They have always done this with every hand held they have had. This abosolutely nothing new. That being said every claim you made in this seems to completely ignore that piece of information and comes off sounding dumb. That being said if the 3ds is failing or if this upgrade is a mistake then it isn't because of the changes themselves and most likely have to do with other factors. Stop being a lazy writer that expects its reader to not have common sense and write about the other factors I mention please.

    P.S Everything you mentioned has been done by them before for their handhelds while they had success. Obviously your not so carefully though out list are the main reason if even reasons at all for them to fail.

  • Report this Comment On September 04, 2014, at 2:04 PM, TMFSunLion wrote:

    They have not "done this with every handheld". They made new versions, but they played the SAME games.

    The only instance of a technological divide was the Game Boy Color, as a previous reader mentioned. As I stated, the GBA got fragmented, but all three versions played the same games, there weren't any games that were exclusive to each model.

  • Report this Comment On September 04, 2014, at 2:05 PM, TMFSunLion wrote:

    @Dan91x -- Yes, the 3DS has sold very well. But sales are peaking much earlier than the DS, as I mentioned.

    @BHGamer -- Good point about repeated purchases, that's a strange phenomenon that might make a difference with the "new" 3DS.

  • Report this Comment On September 04, 2014, at 3:27 PM, JJOpoku wrote:

    What I am annoyed of is this title on the article. "A foolish effort to save the 3DS"

    So when was the 3ds in need of saving? The artice clearly states that the 3ds has sold 44.1 million units. Are those the numbers for a console that needs saving?

    Im guessing the writer thinks it needs saving jus becuz the previous console sold way more. But isnt part of the reason the previous console sold way more cause of doing the same thing they're doing now? (that is, making newer versions?)

    if that is not the case then I guess people like the writer are always gonna assume that any nintendo console needs saving.

  • Report this Comment On September 04, 2014, at 7:00 PM, awang0718 wrote:

    Let's take a look at things objectively, which is something this author has struggled to do.

    The New 3DS and New 3DS XL has:

    - a faster CPU

    - more RAM

    - a second analog nub/C-stick

    - "stabalized" 3D effects

    - customizable cover plates (for the New 3DS only)

    - compatibility with micro-SD cards

    - additional shoulder buttons (Zl and ZR)

    - SNES colored face buttons

    - built in NFC for Amiibo support

    - slightly larger screens and form factor

    The 3DS lacks:

    - compatibility with normal SD cards

    Clearly, the New 3DS and New 3DS XL are improvements over the older models in almost every way. So why does this author think the New 3DS will fail??

    "A foolish effort to save the 3DS."

    Does the 3DS need a sales boost? Yes. Does it need to be "saved"? No. Nobody, not even Nintendo, believes the 3DS will match the success of the DS. Mobile is just too big for any of the 8th gen systems (outside of the PS4) to outsell their 7th gen predecessors.

    "A product of old-school modular thinking"

    This IS a product of old school thinking, just not in the way the author puts it. The Gameboy Color and DSi were significant improvements over their older brothers that. Both of those redesigns were major successes. The New 3DS is no different.

    "Alienating core 3DS gamers with exclusive games"

    The only New 3DS exclusive that has been announced is Xenoblade Chronicles, a port of a (good) 4 year old Wii game. Most 3DS owners have never even heard of this game, so how is thisport of an old, niche Wii game supposed to piss of all 45+ million 3DS owners???

  • Report this Comment On September 04, 2014, at 7:14 PM, awang0718 wrote:

    My take on the New 3DS.

    I think the new 3DS is a smart move from Nintendo as the first of many decisions the company will make to cater to more hardcore gamers. The inclusion of better hardware, improved sterioscopic 3-D, additional buttons, and a sexier design shows that Nintendo has been listening to complaints about the 3DS hardware.

    This is a move to rectify all of the 3DS's mistakes, which should pave a solid path for Nintendo to launch a successful 9th generation handheld. The New 3DS is essentially the Gameboy Color/DSi of the 3DS family.

    I expect the New 3DS to sell very well. Even if this revision doesn't fly off shelves, it will at least cater to the Disney Infinity/Skylanders audience, thanks to the built-in NFC that will enable Amiibo support.

    Whatever happens, I 100% guarantee you the New 3DS will NOT be a "Confusing, Colossal Mistake."

  • Report this Comment On September 04, 2014, at 7:19 PM, awang0718 wrote:

    Tl:DR The New 3DS is a great idea, thanks to better hardware, more features, and additional buttons. It should be a big success.

    The author is being foolish, believing the 3DS "needs saving", disregarding the Cameboy Color/DSi, and thinking the announcement of Xenoblade Chronicles means Nintendo will compleetly drop support for the older 3DS models.

  • Report this Comment On September 04, 2014, at 7:52 PM, Kazi7 wrote:

    I agree. Theyre clearly going to be making tons of exclusive games for this because why launch a new set of hardware without exclusive hardware that warrants the purchase? Personally i dont see any improvements that would get me to spend another $150+ after owning a 3DS for only a year. Someone said that its similar to the GB to GBC but the GBC came out 8 years after the GB not 4. The updated CPU better be significant. And the C-button is stupid looking. How is it supposed to give dual analog? The naming is also a mess. Something is wrong with Nintendo's marketing

  • Report this Comment On September 04, 2014, at 8:38 PM, murderousjohnny wrote:

    To writer: I meant in general every thing they done they have done before. And yes they have made model exclusives in the past. Dsi could play games that the DS couldn't . Again I repeat none of these are the reason that 3ds is failing. They have had success with these changes before and if there is a failure it has nothing to do with these changes. Go do better job researching and common sense if you are going to write an article because all this article amounts to is:

    "Nintendo is repeating everything they've done with their handhelds in the past but for a reason I'm not going to explain it will fail this time." That is a summary of your article.

  • Report this Comment On September 06, 2014, at 12:35 AM, awang0718 wrote:

    @Kazi7

    "Theyre clearly going to be making tons of exclusive games for this because why launch a new set of hardware without exclusive hardware that warrants the purchase?"

    Source? Where did you get this information??

    Were you not alive when the Gameboy Color/DSi were released? Because those systems had a few exlcusive games, but nothing close to "tons of exclusive games."

    As far as we know, Xenoblade Chronicles may be the only worthwhile New 3DS exclusive we will see in 2015.

  • Report this Comment On September 06, 2014, at 5:50 PM, Sayan wrote:

    All I know, is that I am looking forward to it. Exactly the move I expected from Nintendo. It took them the usual time to make it but it happened with clockwork precision. Breathes new life to an already very successful product.

  • Report this Comment On September 22, 2014, at 12:58 AM, awang0718 wrote:

    This author calls the New 3DS a "confusing, collosal mistake"

    Three months later...

    http://www.fool.com/investing/general/2014/09/19/will-super-...

    "The "new" 3DS, which will arrive in Japan in October, allows gamers to place the Amiibo directly on the screen...However, Amiibos could significantly boost the revenue generated per game and increase interest in both of Nintendo's consoles."

    Flip Flop much...

  • Report this Comment On October 14, 2014, at 10:43 AM, Stealth2k wrote:

    Who cares about this site? It is flamebate factless nonsense

  • Report this Comment On October 15, 2014, at 6:03 PM, awang0718 wrote:

    The New 3DS and New 3DS XL just launched in Japan a few days ago.

    According to Famtsu, the New 3DS family has sold over 233,000 units during its first 48 hours. Yep, I'm suring that is such a "colossal mistake"...;)

    On the software side of things, Monster Hunter 4G sold over 1.4 million copies during the same time period, which is astounding considering the game is a remaster. This game was bundled with the New 3DS XL, which explains why the New 3DS XL outsold the normal New 3DS 3 to 1.

    Source:

    http://www.ign.com/articles/2014/10/15/new-nintendo-3ds-sell...

  • Report this Comment On November 18, 2014, at 7:49 PM, awang0718 wrote:

    Apparently, in Japan, the New 3DS has a sales trajectory that is virtually identical with that of the DSi. Both revisions have sold over 500,000 units during their first 5 weeks of release. The New 3DS is expected to sell at least 1.2 million units in Japan by the end of the year thanks to blockbuster releases such as Pokemon Omega Ruby/ Alpha Sapphire and another edition of Youkai Watch 2. These sales figures, of course, do not include sales figures of the older 3DS models.

    Yep..."...collosal mistake" indeed...;)

    Source:

    Siliconera

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