Motley Fool Stock Advisor
selection Nintendo (OTC BB: NTDOY.PK) briefly surpassed Sony
Nintendo has four products, each with related software sales, and really only two products of any consequence: The motion-sensing Wii console and the touch-sensitive DS portable. In simpler terms, Nintendo concentrates entirely on the video game business. Sony, on the other hand, has HDTV's, stereos, DVD players, video game consoles, a financial services business, and a smattering of other OEM products.
Nintendo's simplified focus doesn't stop at its product lines. By aiming the Wii at nontraditional gamers who don't care about the newest, flashiest graphics, Nintendo can use technology a generation behind the chipsets employed by Microsoft
It was a bit of a gamble to pursue consumers who generally ignore video games, but by using cheaper components, Nintendo was able to lower the cost of making that bet. Now the company's biggest problem is its inability to crank out units fast enough to meet demand.
To justify its valuation, Nintendo must prepare to defend its unique strategy and brand, because the economics of its current strategy will surely encourage competition. For the next few years, it should be smooth sailing for Nintendo. But what happens in the next product cycle will determine Nintendo's longer-term fate. Still, with its cash hoard and well-known brand, Nintendo has a pretty big head start.
Wii hope you enjoy further Foolishness: